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Analyst Meet / AGM - Analyst Meet

Credit costs expected to show gradual improvement from H1FY2015

L&T Finance Holdings

28-Apr-2014, 05:51
L&T Finance Holdings conducted an analyst meet on 23 April 2014 to discuss the results for the quarter ended March 2014 and way forward. N Sivaraman, President and Wholetime Director of the company addressed the call:
Highlights:

Loan assets of the company crossed Rs 40000 crore mark with healthy growth of 20% yoy in a challenging environment. Disbursement growth stood at 13% yoy, which was largely driven by Retail - rural products, personal vehicle and housing finance along with operational projects in infrastructure.
With completion of integration of acquired entities, opex reduction in retail business continues to be a key focus area.
Credit costs were at elevated levels, while company expects gradual improvement from H1FY15.

Retail & Mid Market Finance

PAT growth in the Retail and Mid-Market Finance segment was in line with asset growth, while consistent improvement in NIMs during FY14 was as a result of changing product mix.
The asset quality was under pressure due to slowdown in the economy. Nevertheless, the slippages in CE/CV segment were contained effectively, while also increased net restructured assets resolution through coordination with co-lenders and promoters.
As of March 2014, provision over RBI norms is Rs 117 crore with assets of Rs 39 crore lying in repossessed stock.
The company expects higher NIMs contingent on favorable interest rate environment - stable opex, lower credit costs and higher gearing expected to result in improved RoEs in FY2015.
Company will continue thrust on retail - rural products, personal vehicle, housing and microfinance, while build SME finance business and pursue high quality large ticket corporate relationship
Efforts would be to improve customer service and reduce operating costs, along with constant monitoring of credit quality

Wholesale finance

Thrust will be on operational assets through the IDF - NBFC and non-infra book
Wholesale Finance segment witnessed rise in GNPA due to additional slippages, offset by recoveries on existing accounts.
Value of assets sold to Asset Reconstruction Company stood at Rs 128 crore in FY2014.
Net restructured assets stood at 6.8% of the wholesale loans and advances at end March 2014.
As of March 2014, the provision over RBI norms stands at Rs 78 crore.
Non-accrual of interest on NPAs led to narrowing of margins during FY2014.
Credit cost for the quarter remains flat, while improvement in asset quality is likely to be contingent on expected recovery in the economy during FY15..
L&T Infra debt funds has received the approval from RBI to function as IDF-NBFC, to be operational in FY2015.

Investment Management business

Investment Management business ranked 13th by AAUM with portfolio of 25+ funds and branch network of 50+ cities, catering to around 8 lakh investors.
Investment Management business has achieved break-even for FY14 led by asset growth and tight cost control.
Growth in AAUM for the investment management business was driven by strong net sales performance.
Target to further build scale with a desirable asset-mix, increasing the proportion of equity AUM through SIP and retail
Target new product launches and increase institutional sales and continue to ensure tight cost controls to improve profitability
To launch of L&T Emerging Business Fund in Q1FY2015.

Housing Finance

Housing Finance business witnessed stabilization of sourcing model in the 16 operational markets in FY2014, while being able to service customers in 68 cities. Product portfolio diversification continues to be a key focus area of the segment.
Housing finance loan book grew 5.7 times compared to FY13, with organic growth being 4.4 times above FY13 book. Momentum in disbursements continues with 23% growth on qoq basis.
In housing finance book, increase in GNPA was led by recognition of GNPAs in the acquired portfolio post the 90 day cool off period post acquisition.

Wealth Management

Wealth Management business is set to grow further. During FY14, Premier Wealth business catering to the mass affluent segment was launched. In Q1FY2014, the company would launch Dubai operations with a representative license.