IIFL Finance reports 51% growth in full year profit on the back of 18% growth in loan assets.
Financial performance review
IIFL Finance had loan assets under management of Rs 44,688 Cr as at March 31, 2021, with the home loans segment constituting 32%, gold loans 29%, business loans 17% and microfinance loans 11% of the total AUM.
The company’s annualized ROE and ROA for Q4FY21 stood at 20.7% and 2.8% respectively. The company recorded its pre-provision operating profit of Rs. 650 Cr. during the quarter, driven by mainly volume growth and reduction in cost of funds. Average borrowing costs for the quarter decreased by 13 bps q-o-q to 8.8%.
90% of our loans are retail in nature and 36% are PSL compliant. The assigned loan book, currently at Rs 11,076 Cr, is 25% of AUM. Besides, there are securitized assets of Rs. 3,828 Cr. There exists significant opportunity for further assignment and securitization, given our granular and retail book.
Mr Nirmal Jain, Chairman, IIFL Finance Ltd., commented on the financial results: “During these difficult times of Covid19 pandemic, we are indeed proud of our people who braved all the challenges to ensure unremitting service to the customers and help the company deliver stellar performance. We are leaving no stone unturned to ensure safety of our people and contribute to help Covid affected people. While continuing to invest in people and technology from long term perspective, we remain cautious about short term fallout of the second wave of Covid.”
GNPA stood at 2.1 % and NNPA stood at 1.0%, as at March 31, 2021. With implementation of Expected Credit Loss under Ind AS, provision coverage on NPAs stands at 186% excluding standard asset coverage.
Total CAR stood at 25.4% including Tier I capital of 17.5% as at March 31, 2021, as against statutory requirement of 15% and 10% respectively. Capital Adequacy Ratios (CAR) improved as company raised ₹670 Cr by sub debt.
The total presence of branches grew to 2,563 as at the end of quarter from 2,439 branches as at previous quarter, spanning the length and breadth of the country.
Business segment review
Home Loans: At the end of the quarter, retail home loan assets grew by 16% y-o-y and 7% q-o-q to Rs 14,439 Cr. The primary focus in this segment is on affordable and non-metro housing loans. Over 43,000 customers were benefitted with a subsidy of more than Rs 1,026 Cr under the Pradhan Mantri Awas Yojana – Credit Linked Subsidy Scheme.
Gold Loans: As of March 31, 2021 the gold loans AUM grew to Rs 13,149 Cr, showing a strong growth of 44% y-o-y and 8% q-o-q. Gold loans are provided through our widespread presence in 600+ cities across 25 states to salaried, self-employed and MSME customer segments.
Microfinance: The microfinance business continued its steady growth, with the loan AUM growing 40% y-o-y and 21% q-o-q to Rs 4,738 Cr as at March 31, 2021. The microfinance customer base increased to over 16 lakh customers.
Business loans: Secured business loans grew by 11% y-o-y and 1% q-o-q to Rs. 5,439 Cr., whereas unsecured business loans continued to decline on both y-o-y and q-o-q basis. Under the Emergency Credit Line scheme, we have disbursed Rs. 344 Cr. till March, 2021.
Transfer of real estate credit assets to an Alternate Investment Fund (AIF)
IIFL Finance is in the process of transferring substantial part of its Construction & Real Estate (CRE) loan assets that are in the form of non-convertible debentures to an Alternative Investment Fund. IIFL Finance will continue to own at least a third of the AIF’s units. The AIF has a target fund size of Rs 3600 Cr and has signed a Contribution Agreement on May 1, 2021, with Credit Opportunities III PTE. Ltd, a fund managed by Ares SSG Capital Management, committing a contribution of upto Rs 1,200 Cr towards units in the AIF. The first tranche of loan assets is expected to be sold to the AIF in a week and remaining loan assets in next few weeks, as documentation and diligence get completed.
The capital released by the above transaction, will strengthen IIFL Finance balance sheet and help it focus sharply on retail lending, in line with its strategy.
Cash and cash equivalents and committed credit lines from banks and institutions of Rs 5,275 Cr were available as on March 31, 2021. During the quarter, we raised Rs 3,889 Cr through term loans and refinance from banks. Loans of Rs 3,189 Cr were securitized and assigned during the quarter.
Buy back of MTN bonds
During March and April 2021, we bought back USD 9 million (nominal value) of our MTN issue through open market and further initiated for cancellation of notes. This is close to maximum permissible under RBI regulations currently.