Mahindra Finance posts 62% drop in net profit as it provides for Covid

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May 16, 2020 5:00 AM

Mahindra Finance on Friday reported a 62% year-on-year (y-o-y) drop in its standalone net profit at Rs 221 crore for the March quarter as it set aside Rs 563 crore as Covid-related provisions.

At the consolidated level, Mahindra Finance’s net profit fell 66% to Rs 239 crore for the quarter ended March 2020.

Mahindra Finance on Friday reported a 62% year-on-year (y-o-y) drop in its standalone net profit at Rs 221 crore for the March quarter as it set aside Rs 563 crore as Covid-related provisions. At the consolidated level, Mahindra Finance’s net profit fell 66% to Rs 239 crore for the quarter ended March 2020.

“The company, in order to cover the contingencies that may arise due to Covid–19 pandemic, has incorporated the management overlays in the impairment loss allowance and the total provision recognised in the statement of profit and loss during the quarter is Rs 562.60 crores,” Mahindra Finance said in a statement.

The company saw its customer base cross 6.8 million during the quarter. The standalone assets under management (AUM) stood at Rs 77,160 crore as on March 31, 2020, up 12% from Rs 68,948 crore as on the corresponding date last year.

Ramesh Iyer, vice-chairman and managing director, Mahindra Finance, said that over 75% of the company’s customers had availed the loan moratorium. “The ones who did not (take the moratorium) largely belong to the farming community, where they felt that their cash flows would improve and they would be able to pay,” he told analysts during the post-results call.

The company has already reopened around 500 of its branches in green and orange zones and is seeing walk-ins for both new loans and repayment of installments. Since the harvest has been good this year across states, farm incomes are likely to hold well, Iyer said. The company saw some collections happened in April and those made in the first 15 days of May have slightly surpassed the amount collected in April.

Volume growth could still be some time away, though. “Even before the Covid impact, we had said that any normalcy to business volumes could be seen only post October, that is, the festival season, and it continues to appear that it will only arise around that time,” Iyer added.

Total income increased 8% y-o-y to Rs 2,676 crore during Q4FY20. The gross non-performing assets (stage-3) fell to 8.44% of the business assets, as on March 31, 2020, from 8.5% in the December quarter. The net NPA ratio stood 5.98%, down from 6.7% of the business assets at the end of Q3. The stage-3 provisioning coverage ratio stood at 31%, up from 22.9% in the December quarter.

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