Edelweiss reports net loss of Rs 2,281.5 crore due to jump in impairments

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Published: July 6, 2020 12:40 AM

The company said that it has recently finalised a sell-down transaction of Rs 4,000 crore with two global investors for its wholesale loans and plans to sell another Rs 3,000 crore of such loans in financial year 2021 (FY21).

Edelweiss’ total income declined 35.3% y-o-y to Rs 1,965.8 crore in the March 2020 quarter.

Edelweiss Financial Services on Saturday reported a consolidated net loss of Rs 2,281.5 crore in the March quarter due to 1,277% year-on-year (y-o-y) increase in impairments. The total impairments stood at Rs 2,549 crore, compared to Rs 185.11 crore in the same quarter last year. The jump in impairments happened due to revision in the Expected Credit Loss (ECL) model and impact of Covid-19. The company had earlier announced to revise ECL model in December quarter.

Edelweiss’ total income declined 35.3% y-o-y to Rs 1,965.8 crore in the March 2020 quarter. “In this quarter, we have taken three conscious decisions based on our experience and that of our board: the markdown and sell-down of our corporate asset book, accelerating to capital light model in retail credit and the proposed equity raise at Edelweiss & in our Wealth & Asset Management business,” said Rashesh Shah, chairman and chief executive officer (CEO), Edelweiss Financial Services.

The company said that it has recently finalised a sell-down transaction of Rs 4,000 crore with two global investors for its wholesale loans and plans to sell another Rs 3,000 crore of such loans in financial year 2021 (FY21). The company is planning to raise equity capital of Rs 1,500 – 2,000 crore in FY 21.  Edelweiss also said that it has assessed the Covid-19 impact on liquidity at Rs 4,000 crore in the first six months of FY21.

“The impact of the Covid-19 pandemic on group’s results, including credit quality and provisions, remains uncertain and dependent on the current and further spread of Covid-19, steps taken by the government and the Reserve Bank of India (RBI) to mitigate the economic impact and also the time it takes for economic activities to resume and reach the normal levels,” Edelweiss said.

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