Shriram City Union net falls 42% on Covid provisioning

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Published: June 13, 2020 12:20 AM

The company said that as the initial lockdown in India was imposed on March 25, it lost potential business in the last week of the month.

Loan disbursements fell 18% y-o-y to Rs 5,416 crore and total assets under management (AUM) fell 1.7% y-o-y to Rs 29,085 crore.

Shriram City Union Finance (SCUF) reported a 42% year-on-year (y-o-y) drop in net profit for the March quarter as it set aside Rs 426 crore as provisions against Covid-19. The company said that as the initial lockdown in India was imposed on March 25, it lost potential business in the last week of the month. “However, SCUF had completed most collection activities for the month before the Lockdown,” the company said.

Loan disbursements fell 18% y-o-y to Rs 5,416 crore and total assets under management (AUM) fell 1.7% y-o-y to Rs 29,085 crore. The sharpest drop in disbursements was seen in personal loans, where they slid 94% to Rs 43 crore. Small business loan disbursements dropped 37% to Rs 1,880 crore and two-wheeler disbursements fell 10% to Rs 1,182 crore. The two categories which saw positive y-o-y growth in disbursements in Q4 were auto loans (140%) and gold loans (33%).

SCUF’s net interest margin, a key measure of profitability, shrank to 12.33% from 12.69% in the previous quarter. The gross stage-3 assets ratio, a measure of bad loans in the loan book, fell to 7.9% from 8.51% in Q3FY20, while the net stage-3 assets ratio shrank to 4.23% from 4.98%.

The company raised resources worth Rs 3,638 crore in Q4. Its total borrowings as on March 31, 2020 stood at Rs 23,166 crore, up from Rs 22,030 crore on December 31, 2019.

In accordance with the board approved moratorium policy relating to Covid-19 regulatory package announced by the Reserve Bank of India (RBI), the company has granted moratorium up to three months on the payment of instalments falling due between March 1, 2020 and May 31, 2020, to all eligible borrowers, and has continued recognition of interest. “In view of the management, this relaxation does not trigger any significant increase in credit risk,” SCUF said in the notes to accounts.

SCUF’s shares ended at Rs 666.25 on the BSE on Friday, down 2.62% from their previous close.

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