Edelweiss Financial Services Ltd reported a 49 per cent decline in first quarter consolidated net profit at Rs 134 crore against Rs 263 crore in the year ago period.
The bottomline of the diversified financial services company was weighed down by expenses, especially a 137 per cent year-on-year (yoy) jump in provision towards impairment of financial instruments at Rs 284 crore and a 77 per cent increase in expenses towards change in insurance policy liability (actuarial).
Total income increased 3 per cent yoy to Rs 2,546 crore. Total expenses rose 14 per cent yoy to Rs 2,343 crore.
Consolidated profit before tax in the reporting quarter was down 52 per cent yoy at Rs 203 crore (Rs 422 crore in the year ago quarter). EFSL's businesses are broadly divided into Credit Business, Advisory Business, and Insurance.
Rashesh Shah, Chairman and CEO, observed that the current economic slowdown is not confined to just one sector, but has impacted virtually all areas of the economy; this is evident from the results of many companies this season.
Shah expects H1 (first half) FY20 to be muted but hopes that H2FY20 will be better with signs of an easing liquidity environment with steps taken by the RBI and the Government leading to an expected economic recovery, although it may take some time.
"Although the environment has been challenging, our advisory business has done reasonably well and customer assets has seen an upside of 14 per cent YoY. On the credit side, asset quality has been a concern and therefore we have started frontloading our credit costs in a transparent manner.
"...We have been monitoring liquidity very closely consciously preserving liquidity at the cost of growth. Our collateral values remain strong, we have a strong capital base, a low debt equity ratio, and capital adequacy of close to 20 per cent,” Shah said.