Mahindra Finance on Wednesday reported a net profit of Rs 164 crore, down 18% y-o-y, for the quarter ended December 31. Net profit at the non-banking finance company (NBFC) was down mainly on account of loan provisions and write-offs during Q3.
Asset quality deteriorated and gross non-performing assets (NPAs) increased by 53% y-o-y to Rs 1,515.3 crore, while net NPAs were up 80% y-o-y to Rs 673.9 crore. As a ratio, gross NPAs were at 4.7% of total gross advances and were up 60 bps from the preceding quarter, while net NPAs ratios were at 2.2% in Q3 up 30 bps from the September quarter.
As a consequence, provisions for bad loans increased sharply to Rs 179.6 crore from Rs 815 crore last year. The company said it witnessed pressure from certain geographies and products, which resulted in higher provisioning in its release.
?Against the expectation that rural cash flows will be extremely good in the third quarter because of the good monsoon, I think that has got postponed virtually to either middle or end of December and more moving to the fourth quarter. And if you look at it geographically, it?s the southern market which is yet to improve,? said Ramesh Iyer, managing director at Mahindra Finance. ?But they will all respond after Pongal, which was on January 15. It is more of a postponement of the timing,? he added.
Net interest income, however, was up 20.6% y-o-y to Rs 676.6 crore and net interest margins were at 8.5%, which was down 60 bps from last year and down 40 bps from the preceding quarter. Operating profit was at Rs 429.2 crore, up 13.2% y-o-y.
Mahindra Finance also reported a 28% y-o-y growth of its total assets under management to Rs 32,858 crore at the end of Q3. The company?s share price at the end of Wednesday?s close was down 4.91% to Rs 253.95.
