Mahindra Finance reports 57% jump in standalone net profit at Rs 369 cr

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Mahindra & Mahindra Financial Services Ltd (MMFSL) reported a 57 per cent year-on-year (yoy) jump in second-quarter standalone net profit to ₹369 crore, up from ₹235 crore in the year-ago period, due to healthy growth in net interest income and a tight rein on employee benefit expenses.

However, the non-banking finance company’s net profit in the reporting quarter was down 28 per cent from the preceding quarter’s ₹513 crore.

In the reporting quarter, net interest income (the difference between interest earned and interest expended) was up 19 per cent year over year to ₹1,991 crore (₹1,674 crore in the year-ago quarter).

Loan disbursement during the quarter declined marginally to ₹13,162 crore (₹13,315 crore). However, sequentially, loan disbursement was up 3 per cent from the preceding quarter’s ₹12,741 crore.

Loan disbursements declined in three segments: passenger vehicles (-3 per cent), commercial vehicles and construction equipment (-10 per cent), and three-wheelers (-1 per cent), but rose in four segments: pre-owned vehicles (2 per cent), tractors (1 per cent), SME (52 per cent), and others such as farm implements, gensets, and personal and consumer loans (13 per cent).

Gross loan book increased by 20 per cent yoy to ₹1,12,454 crore (₹93,723 crore). Credit costs rose 12 per cent yoy to Rs 703 crore (Rs 627 crore).

Gross Stage 3 (credit impaired) assets as a per cent of Business Assets increased sequentially from 3.6 per cent as of June-end 2024 to 3.8 per cent as of September-end 2024.

“About 40% of this increase was contributed by Tractor segment. With Kharif cashflows, the company expects normalization in Q3 FY25. Stage-2 (assets with significant increase in credit tisk) and Stage-3 assets put together were at 10.3%,” MMFSL said in a statement.

The company had a provision for expected credit loss of ₹3,935.32 crore as of 30 September 2024 (as of 31 March 2024: ₹3,401.59 crore).

In the matter of fraud at its branch in Aizawl (Mizoram) reported during Q4 FY 24, the company observed that law enforcement authorities were investigating during the quarter and half year ended 30 September 2024. The company said it is making necessary provisions for the exposure relating to the above fraud.