IIFL Finance Ltd reported a sharp 91 per cent drop in fourth quarter standalone net profit at ₹17 crore against ₹196 crore in the year-ago period.

Among the reasons for this drop in net profit include recognition of incremental impairment provision of ₹217 crore relating to the impact of Covid-19 on loans and other assets and the net interest income declining by 17 per cent.

The company’s consolidated net profit (includes the financial results of subsidiaries IIFL Home Finance Ltd, Samasta Microfinance Ltd, and Clara Developers Private Ltd) for the fourth quarter declined 81 per cent to ₹59 crore against ₹306 crore in the year ago quarter.

Standalone assessment

IIFL Finance Ltd’s standalone net interest income (interest earned less finance cost) was down 17 per cent at ₹375 crore in the quarter-ended March 31, 2020, against ₹450 crore in the year-ago quarter.

Dividend income declined about 25 per cent to ₹43 crore (₹57 crore in the year-ago quarter) and fees and commission income came down 22 per cent to ₹14 crore (₹18 crore). Other income rose to ₹7.50 crore from ₹3 crore.

On the expenses side, the net loss on fair value changes jumped to ₹56 crore (₹4 crore) and impairment on financial instruments was at ₹211 crore (against a write-back of ₹120 crore).

“Given the dynamic nature of pandemic situation, the company’s impairment loss allowance estimates are inherently uncertain due to severity and duration of the pandemic and, as a result, actual results may differ from these estimates as on the date of approval of these standalone financial results.

“The company will continue to monitor any material changes to the future economic conditions,” as per the notes to accounts.

IIFL Finance reported a loss of ₹51 crore before exceptional items and tax in the reporting quarter against a profit of ₹130 crore before exceptional items and tax in the year-ago quarter.

The company was able to report standalone net profit in the reporting quarter due to write-back of deferred tax of about ₹60 crore and write-back of ₹49 crore due to the impact of change in the rate of opening deferred tax.

Nirmal Jain, Chairman, IIFL Finance, said: “The company has inherent strengths...These will be leveraged to adopt a radically new business model as Covid crisis fades...We are agile in monitoring developments and ready to adapt and advance as environment reverses to normalcy.”

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