IIFL Holdings confident of disbursement recovery in Q4

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IIFL Gold Loan launches free gold coin offer for new customers in North India

As the negative effects of demonetisation are waning, IIFL Holdings
expects a pickup in momentum in the fourth quarter. Decoding the company’s third quarter earnings, Group CFO Prabodh Agrawal said that by February the company should be back to pre-demonetisation levels for disbursements. The company is seeing a recovery in January, he said.

IIFL Holdings reported rise of 41.3 percent in consolidated net profit to Rs 179.07 crore during third quarter ended December 31, 2016 against a net profit of Rs 126.69 crore in the corresponding period of FY16. “Total income (consolidated) has increased to Rs 1,273.68 crore for the quarter ended December 31, 2016 from Rs 984.55 crore for the same quarter of previous fiscal,” the company said in a regulatory filing.

Even though disbursements slipped 20 percent in December against October due to demonetisation, the impact has been limited, Agrawal told CNBC-TV18. He added that the company didn’t recognised NPAs due to the note ban exercise, hence NPAs were down significantly.

Going into February and the fourth quarter, IIFL expects a recovery to normalcy in home loans, loan against property, gold loans and SME loans portfolios, he said. Commercial vehicles portfolio will be last to pickup he added. NBFC, wealth and capital markets momentum will be back to normal in Q4, he said.

Below is the verbatim transcript of Prabodh Agrawal’s interview to Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18.

Latha: Good numbers but just the retail financing part under stress. How has Q3 generally been for IIFL?

A: Our profit for the quarter have grown by 25 percent year-on-year (YoY) for the non-banking financial companies (NBFCs) business. For the group as a whole our profits have grown by 62 percent YoY. So, while there has been some slowdown in our disbursements due to demonetisation, the impact has been limited. Of course November was a slower month compared to October; and December we saw some recovery already, so broadly, our disbursements were down by about 20-30 percent in December versus October. Our collections were down in two products mainly gold and commercial vehicle, but they were fairly okay in all other products including home loans, loan against property (LAP), small and medium-sized enterprises (SME) etc.

We have also quantified the impact in terms of the non-performing assets (NPA) and our gross NPAs are 1.8 percent. If we had not taken the RBI relaxation than the gross NPAs would have been about 2 percent. However, while we did not recognise the NPA due to demonetisation, we have gone ahead and made extra provision for potential delinquency and therefore our net NPAs are down quiet significantly.