L&T Finance Holdings consolidated net profit tanked 73.2% to Rs 147.44 crore on 1.8% slip in total income to Rs 3,623.14 crore in Q1 June 2020 over Q1 June 2019.
Consolidated profit before tax (PBT) slumped 86.6% to Rs 99.26 crore in Q1 June 2020 as against Rs 742.63 crore in Q1 June 2019. Current tax expense for the quarter jumped 82.5% at Rs 250.18 crore as against Rs 137.11 crore in Q1 June 2019. The exceptional item during the quarter ended 30 June 2020 represents net gain of Rs 225.61 crore on the divestment of entire stake in the subsidiary company, L&T Capital Market concluded on 24 April 2020. The Q1 earnings were announced post trading hours yesterday, 16 July 2020.
L&T Finance Holdings said it remained resilient in Q1 FY21, enduring the challenges posed by COVID-19, by maintaining enhanced levels of liquidity, higher focus on restoring collection rhythm including digital modes of collection, and re-initiating disbursements with tightened credit norms. The company also prudently increased provisions to safeguard the balance sheet against uncertainties of the external environment. With roll out of moratorium 2.0, customer communication and engagement remained the key priority.
L&T Finance Holdings followed the RBI's circulars of granting moratorium to customers and offered the option to all its customers. With the opening up and resumption of on-field collection, the team worked with customers to educate the benefits of timely payments. Consequently, the percentage of borrowers opting for moratorium drastically came down in Q1 FY21 as against Q4 FY20. Considerable reduction in portfolio under moratorium for retail products from 79% in March 2020 to 44% in June 2020. There was a reduction in debtors by Rs 1,306 crore and GS3 by Rs 98 crore on the back of improved 'on due date' collections primarily led by farm portfolio.
The company created an incremental provision of Rs 577 crore against its standard assets book in this quarter. The COVID-19 provision was at Rs 277 crore in Q1FY21 (5% of 1-90 DPD book with moratorium, along with Rs 209 crore in Q4 FY20). Its macro-prudential provisions was at Rs 300 crore during the quarter.
The firm carries Rs 1,244 crore of provisions on account of macro prudential provisions, COVID-19 and accelerated ECL provisions on stage 1&2 assets, which are over and above the expected credit losses on GS3 and stage 1&2 assets. The additional provisions translate to 1.39% of the standard book. With this, the company firmly remains well prepared to deal with external uncertainties on account of COVID -19 and other macro-economic concerns. LTFH continues to maintain strong capital adequacy of 21.18%.
Lower NIMs and fees stood at 5.78% in Q1 FY21 as compared to 6.76% in Q1 FY20. Negative carry on account of maintaining higher liquidity buffer of Rs 6,600 crore carried as a prudent measure Rs 84 crore. Lower fee income because of lower disbursals across businesses. Credit Cost in Q1 FY21 is shown at Rs 896 crore as against Rs 595 crore in Q1 FY20.
The Average Assets under Management (AAUM) of the Investment Management business stood at Rs 58,362 crore in Q1 FY21. The AUM for Equity and High-Quality Fixed income asset classes as on 30 June 2020 stood at Rs 33,295 crore and Rs 12,442 crore, with a growth of 19% and 14% respectively on Q-o-Q (quarter-on-quarter) basis.
Commenting on the Q1 financial results, Dinanath Dubhashi, the managing director (MD) and chief executive officer (CEO) of L&T Finance Holdings, has stated: "The results of this quarter should be seen less as a quarterly result and more from the viewpoint of fortifying the company from any challenges arising in post-COVID scenario. Also, the various parameters should not be viewed on absolute levels but on the basis of progressive development from April to June as the company took advantage of gradual unlocking of markets. As the world embraces the 'new normal' by adapting to the radical changes brought about by the pandemic, LTFH with its prudent business initiatives & proactive response mechanism, aided by the definite green shoots in the rural economy, is well poised to take it in its stride."
"This quarter, we focused on restoring the collection rhythm and maintaining the asset quality, especially through on-field customer outreach in non-containment zones. Our investments in digitalization and data-analytics capabilities over the past few years helped us switch gears seamlessly and enabled all our stakeholders to engage electronically. Enhanced provisioning, stronger risk controls, ample liquidity, along with a resilient business model and the revival seen in the rural economy from June onwards, give us the confidence that we will bounce back faster to the pre-COVID levels than anticipated," he further added.
Shares of L&T Finance Holdings rose 1.42% to Rs 60.65 on BSE. L&T Finance Holdings is a diversified non-banking financial company (NBFC).
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