Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue from operations increased marginally to INR6,783.67 crores from INR6,746.15 crores in the corresponding quarter of the previous year.
- Outstanding loan portfolio grew by 4% YoY to INR286,665 crores.
- Individual home loan portfolio rose by 7% YoY to INR246,275 crores, comprising 85% of the total portfolio.
- Total disbursements for the quarter increased by 19% to INR12,915 crores.
- Stage 3 exposure at default improved to 3.30% from 4.96% as on June 30, 2023.
Negative Points
- Net interest income declined to INR1,989.08 crores from INR2,209.44 crores in Q1 FY24.
- Net interest margins fell to 2.76% from 3.21% in Q1 FY24.
- Profit before tax decreased slightly to INR1,628.43 crores from INR1,648.99 crores in Q1 FY24.
- Profit after tax also saw a slight decline to INR1,300.21 crores from INR1,323.66 crores in the same period of the previous year.
- Interest expenses increased by about INR100 crores compared to Q4 FY24 due to higher average liabilities.
Q & A Highlights
Q: What are your views on margins, given the lower recoveries from NP accounts? How should we look at margins moving forward?
A: Margins have been impacted by lower recoveries from NP accounts, which were INR90 crores in Q1 FY25 compared to INR230 crores in Q4 FY24. Despite this, we maintain our guidance of 2.7% to 2.9% margins for the year. We believe margins have bottomed out at 2.76% and expect them to improve in the coming quarters. (Tribhuwan Adhikari, CEO)
Q: Can you elaborate on the growth outlook, especially given the muted performance in Q1?
A: We had guided for double-digit loan growth at the beginning of the year. Despite a 4% growth in Q1, we are confident of achieving this target due to strong disbursements and expected improvements in the coming quarters. We are also revisiting our interest rates to reduce prepayments and enhance growth. (Tribhuwan Adhikari, CEO)
Q: What is causing the volatility in provisioning cover for Stage 1 and Stage 2 assets?
A: The volatility is due to upgrades from Stage 2 to Stage 1 and some movements to Stage 3. Additionally, provisions for accounts upgraded from Stage 2 to Stage 1 in March were retained at Stage 2 levels for a quarter, which were then reversed in June. (Sudipto Sil, CFO)
Q: How do you plan to balance growth and margins, given the competitive interest rates?
A: We aim to maintain competitive rates while focusing on risk-based pricing. We are also targeting higher-margin segments like self-employed borrowers and other home loans, which should help improve margins without significantly impacting growth. (Tribhuwan Adhikari, CEO)
Q: What is the outlook for collections from NP accounts in the coming quarters?
A: Collections from NP accounts were lower in Q1 at INR90 crores. We expect this to improve to around INR130 crores to INR140 crores per quarter in the coming quarters. (Sudipto Sil, CFO)
Q: Can you provide details on the provisioning coverage ratio (PCR) for different asset classes?
A: The PCR for individual home loans and non-housing individual loans is around 37%-38%, while for non-housing commercial and project loans, it is around 60%. (Sudipto Sil, CFO)
Q: What is the strategy for the non-housing loan segment, given the high GS3 ratio?
A: The high GS3 ratio in the non-housing segment is due to legacy issues. We have learned from past mistakes and are now focusing on high-quality borrowers and better monitoring. We aim to increase the share of non-housing loans to around 20% of disbursements this year. (Tribhuwan Adhikari, CEO)
Q: What is the expected trend for incremental cost of funds?
A: We expect the incremental cost of funds to trend downwards due to improved liquidity and declining treasury bill rates. We have also secured fresh term loan sanctions at competitive rates. (Sudipto Sil, CFO)
Q: What are the anticipated write-offs for the rest of the year?
A: We expect further write-offs of around INR400 crores to INR500 crores in the coming quarters. (Tribhuwan Adhikari, CEO)
Q: What is the status of NCLT recoveries?
A: We are expecting positive outcomes for three significant loans in NCLT, totaling around INR1,025 crores, over the next two quarters. (Tribhuwan Adhikari, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
