Shriram Transport Finance reports 17% decline in Q3 profit

Shriram Transport Finance Company (STFC) reported a 17 per cent decline in third-quarter net profit at ₹728 crore against ₹879 crore in the year-ago period.

The bottom line was weighed down by a 52 per cent year-on-year (YoY) jump in provision towards impairment on financial instruments, including towards accounts impacted by Covid-19 pandemic, and 9 per cent increase in finance costs.

Net Interest Income in the reporting quarter edged up about 2 per cent to ₹2,148 crore (₹2,114 crores in the same period of the previous year).

Provision towards impairment on financial instruments rose 52 per cent YoY to ₹675 crore. Finance costs were up 9 per cent YoY at ₹2,236 crore.

“The prolonged lockdown imposed by the government due to Covid-19 pandemic has affected the Company's business operations. The company has considered an additional Expected Credit Loss (ECL) provision on Loans of ₹224.82 crore...during the quarter,” the company said in a statement.

STFC said it has invoked a resolution plan to relieve Covid-19 pandemic related stress for eligible borrowers worth ₹2267 crore., out of which as on December 31, 2020 the company had restructured loans worth ₹309.60 crore. The balance is likely to be restructured in the next couple of quarters, it added.

Gross Non-Performing Assets (NPAs) and Net NPAs as of 31st December 2020 stood at 5.33 per cent and 3.22 per cent respectively, as against 8.71 per cent and 6.09 per cent as of 31st December 2019, the statement said.

With proforma slippages (adjusted for the Supreme Court’s interim order), Gross NPA and Net NPA ratio would have been 7.11 per cent and 4.31 per cent, respectively.

The company’s assets under management were up 5.51 per cent YoY to stand at ₹1,14,932 crore as at December-end 2020.