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  • Financial performance for the quarter ended December 31, 2018

    Published on January 22, 2019

    by Sachin Murdeshwar

    Robust ALM Framework:  LTFH is comfortably placed with respect to both liquidity and interest rate risks, due to its robust ALM and strong risk management framework.

     

    As on 31st December, 2018:

     

    • LTFH enjoys positive gaps in both Structural Liquidity and Interest Rate Sensitivity

     

    Structural Liquidity Statement

    1 Year Gap

    Rs. Cr

    Asset Inflows (A)

    52,325

    Liability outflows (B)

    30,878

    Positive (A-B)

    21,447

    Interest Rate Sensitivity Statement

    1 Year Gap

    Rs. Cr

    Re-priceable Assets (A)

    74,185

    Re-priceable Liabilities (B)

    54,669

    Positive (A-B)

    19,516

     

    • Liquidity of Rs. 4,173 Cr is maintained in form of cash, FDs and other liquid instruments. In addition to this, we have undrawn bank lines of Rs. 9,489 Cr and back up line from L&T of Rs. 2,000 Cr.

    • During Q3FY19, LTFH has raised funds of ~ Rs.29,800 Cr (Rs.16,767 Cr through market instruments and Rs.13,033 Cr through bank finance/ ICDs)

    • At 8.50% our weighted average cost of funds remains well in control despite volatility and hardening of interest rates

    • Competitive strength in our focused businesses has enabled us to maintain steady NIMs

     

    Growth in businesses: In its focused lending businesses, namely Rural Finance, Housing Finance and Wholesale Finance, LTFH recorded 23% YoY increase in assets in Q3FY19. At the end of Q3FY19, Rural and Housing businesses together constituted 50% of total portfolio as against 41% at the end of Q3FY18.

     

    Focused Lending Businesses

    Q3FY18

    Rs. Cr

    Q3FY19

    Rs. Cr

    Book Growth

    Q3FY19 vs Q3FY18

    Rural Finance

    14,678

    24,122

    64%

    Housing Finance

    17,398

    23,319

    34%

    Wholesale Finance

    43,871

    46,267

    5%

    TOTAL

    75,948

    93,708

    23%

     

    LTFH also delivered growth in its Investment Management and Wealth Management businesses. Average Assets under Management (AAUM) in Investment Management business increased to Rs. 69,080 Cr in Q3FY19 from Rs. 60,313 Cr in Q3FY18 – growth of 15%. Assets under Service (AUS) in Wealth Management business increased to Rs. 22,887 Cr in Q3FY19 from Rs. 17,102 Cr in Q3FY18 – growth of 34%.

     

    Improving asset quality: LTFH has shown a substantial reduction in Stage 3 assets, both in absolute and percentage terms. This has been achieved through vigorously monitored early warning signals, concentration on early bucket collections and strong Stage 3 resolution efforts. LTFH’s provision coverage has also increased during this time, indicating strength of its portfolio.

     

    (Rs. Cr)

    Q3FY18

    Q2FY19

    Q3FY19

    Gross Stage 3

    7,513

    6,119

    6,033

    Net Stage 3

    3,222

    2,296

    2,263

    Gross Stage 3 %

    10.40%

    7.10%

    6.74%

    Net Stage 3 %

    4.74%

    2.79%

    2.64%

    Provision Coverage %

    57%

    62%

    62%

     

    In addition to the provisions mentioned above, LTFH has set aside Rs. 85 Cr as macro-prudential provisions in Q3FY19, taking overall macro-prudential provisions to Rs. 269 Cr. These provisions initiated in Q1FY19 are for any unanticipated future event risk, and are over and above the expected credit losses on GS3 assets and standard asset provisions.

     

    Profitability: LTFH has delivered consolidated PAT of Rs. 580 Cr in current quarter as against PAT of Rs. 321 Cr for Q3FY18, a strong growth of 81%. Having achieved a RoE of 18.45% in Q1FY19, LTFH has maintained its profitability with 18.34% RoE in Q3FY19. This has been achieved on the back of strong NIMs plus Fee income, strict control on cost and improved asset quality.

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