An analysis of 355 NBFCs showed an improvement in their performance in the three-month period.
The Reserve Bank of India, which has been continually strengthening the supervisory framework for the sector, had asked NBFCs to make a 0.25% provision on standard assets or performing loans. Of the 355 NBFCs selected for this study, 46% was found to have increased their efficiency during the third quarter of the fiscal. Aggregate income of 355 NBFCs rose 27.2% to R24,156 crore during October-December2010 from R18,991 crore in the same period of the previous year. Their combined net profit posted a higher rise, increasing by 36.5% to R5,123 crore, resulting in a sharp increase in return on total income of 21.21% in the quarter under review from the 19.76% recorded in the previous year.
However, 190 of the 355 NBFCs witnessed a fall in the PAT-to-total income ratio, while 165 NBFCs showed a higher ratio in the quarter over the previous year. Mortgage lenders posted significant profit growth compared with other lenders on the back of a substantial increase in loans and lower non-performing assets. GIC Housing Finance was the best performer (from 20.04% growth in October-December 20009 to 33.04% in October-December 2010). Others putting up a better show included Dewan Housing (15.41% to 15.96%), Can Fin Homes (16.27% to 17.22%) and HDFC (24.30% to 26.83%).
Bajaj Finance and Shriram Transport, which provide auto loans to rural and semi-urban areas, giving them an edge over banks on pricing, also posted significant improvement in the third quarter of this fiscal. Profit growth at Bajaj Finance was up from 10.94% in October-December 2009 to 19.67% in the same quarter this fiscal, while the corresponding figures for Shriram Transport were 20.29% and 21.34%.
Others with improved figures included First Leasing (from 22.80% to 58.12%), Mukesh Babu Financial Services (21.95% to 52.05%), Magma Fincorp (9.64% to 14.26%) and Reliance Capital (4.24% to 7.76%).
On the other hand , a significant fall was observed in the case of Tourism Finance Corporation (35.38% to 25.68%), Edelweiss Capital (23.27% to 14.01%), Muthoot Capital Services (31.06% to 23.32%), Sakthi Finance (8.77% to 1.71%) and Bajaj FinServ (26.51% to 20.07%).
The top five NBFCs in terms of profit after tax in the third quarter this fiscal were HDFC (R891 crore), Rural Electrification Corporation (R664 crore), Power Finance Corporation (Rs 658 crore), Bajaj Holdings and Investment (R501 crore) and IDFC (R 321 crore).