L&T Finance Q1 net doubles to Rs 531 cr, credit costs decline sharply

Consolidated net profit of L&T Finance Holdings Ltd (L&TFH) doubled year on year to Rs.531 crore in the first quarter ended June 2023 (Q1FY24) on the basis of constant net interest margins (NIMs) and lower cost of credit.

NIMs plus fees for the retail sector, which make up 82 percent of loans, improved to 11.71 percent in the first quarter of FY24 from 11.57 percent in the first quarter of FY23. Credit costs fell sharply to 2.78 percent in the first quarter of FY24 from 5.03 percent a year earlier, LTFH said in a statement. Its share price closed down 2.53 per cent at Rs 133.5 per share on the Bahrain Stock Exchange.

NIM+ fees are stabilizing, said Dinanath Dubhashi, Managing Director and CEO of LTFH. Interest rates in the system are also beginning to stabilize.

The ever-increasing rise in the cost of money is slowing down. There was a 7.33 percent growth in the second quarter of FY23 which increased to 7.54 percent in the third quarter of FY23, then to 7.71 percent in the fourth quarter of FY23 and finally to 7.77 percent in the first quarter of FY24.

The company’s retail book volume expanded by 34 per cent year on year to Rs 64,274 crore at the end of June 2023 from Rs 47,794 crore in Q1 FY23. Dubhachi said the company achieved retail business of 82 per cent in Q1 FY24 itself, far exceeding the Lakshya 2026 target of over 80 per cent.

The wholesale book witnessed a rapid and sharp decline of 65 per cent YoY (down Rs. 25,992 crores YoY) to around Rs. 14,200 crores and is expected to fall below Rs. 10,000 crores by the end of March 2024. This was in line with Lakshya’s strategy of aggressively growing the retail book while sharply reducing the wholesale book.

The capital adequacy ratio was 25.75 percent (Level 1: 23.42 percent) in the first quarter of FY24 with sufficient liquidity reserves.