Tata Capital on Tuesday reported a 56% jump in its consolidated net profit for the quarter ended June to Rs 1,547 crore, aided by a robust loan growth.
The net interest income rose 25% on year to Rs 3,571 crore for the reporting quarter, with fee income rising 20% and investment income growing 5% on a year-on-year basis. Operating expenses rose 21% to Rs 1,621 crore.
The annualised return on assets (ROA) increased to 2.3%, compared with 1.8% in the year-ago period. The return on equity increased to 13.7% from 12.5%.
The gross loan book expanded 23% on year to Rs 2.86 lakh crore. Net assets under management (AUM) grew 22% to Rs 2.90 lakh crore, of which retail and the small and medium enterprise (SME) book formed 85.4% and the corporate book comprised 14.6%. The unsecured retail constituted 10.3% of the net AUM.
The non-bank lender forayed into gold loans in the reporting quarter by acquiring an 88.6% stake in Yogakshemam Loans. “We have applied to the Reserve Bank of India for the acquisition and expect to get an approval by the end of the calendar year. In the next 2.5-3 years, we plan to add more than 500 branches and take the gold loan book to Rs 4,000-5,000 crore,” Managing Director & CEO Rajiv Sabharwal said in the post-earnings media call.
With the addition of the gold loan business, the share of retail lending within the combined retail and SME portfolio is expected to increase, though the overall retail and SME mix will remain in the 85-88% range, he added.
As per the investor presentation, disbursals for high-margin products grew 38% on year.
The lender has scaled up disbursements for unsecured products after addressing delinquency trends in personal loans and the microfinance book, while securing the portfolio through government schemes. “The book growth will catch up with disbursal growth in the next few quarters,” the management said.
The gross non-performing asset ratio improved to 1.9% from 2.0% a quarter ago and the net NPA ratio stood at 0.8% as against 0.9%. The annualised credit cost stood at 1% in April-June as compared to 0.9% a quarter ago. “We remain watchful of geopolitical developments, inflationary trends and monsoon-related risks, but continue to see a broadly supportive environment for credit growth,” Sabharwal said.
He also said the board has discussed the possibility of unlocking value in Tata Capital Housing Finance, but no decision has been taken yet. He said the company will wait for the RBI to classify it as an upper-layer NBFC, after which it will have about three years to decide on a listing.
The stock on Tuesday closed 1.3% higher at Rs 355.10 on the NSE.