IIFL Finance Ltd Q1 FY23 Results
IIFL Finance Q1FY23 Results update
IIFL Finance Q1FY23 profits at Rs. 330 Crore, up 24% y-o-y.
For the quarter ended June 30, 2022, the Company reported Total comprehensive income (TCI) of Rs. 332 Cr up 33% y-o-y and net profit after tax of Rs. 330 Cr up 24% y-o-y. Pre-provision operating profit (PPOP) was Rs. 674 Cr. Loan growth in core products was robust – Gold loans and Home loans AUM grew by 29% and 26% y-o-y respectively. Microfinance and Business loans grew by 43% and 7% y-o-y respectively. The non-core (primarily Construction & real estate finance) portfolio shrank by 15% y-o-y. The Company has been on an aggressive expansion spree, adding over 200 branches and about 2,000 manpower. For many loan products, the first quarter of the financial year is seasonally slack, we expect the growth pace to accelerate. While Q1 was impacted by higher provisions for microfinance and other loans, intense competitive pressure on gold yield seems to be easing and demand for home and business loans is seeing positive traction.
IIFL Finance Limited Consolidated Results Quarterly – Q1FY23
| Rs Crore | Quarter endedJune 30, 2022 | Quarter endedJune 30, 2021 | Y-O-Y | Quarter ended March 31, 2022 | Q-O-Q |
| Loan growth | |||||
| Loan AUM | 52,761 | 43,160 | 22% | 51,210 | 3% |
| Core loan AUM | 49,667 | 39,509 | 26% | 47,669 | 4% |
| Non-core loan AUM | 3,094 | 3,651 | (15%) | 3,541 | (13%) |
| Profitability | |||||
| Total Income (Net)* | 1,189.0 | 824.5 | 44% | 1,138.4 | 4% |
| Pre-provision operating profit* | 674.0 | 509.3 | 32% | 670.0 | 1% |
| Profit before tax | 433.9 | 350.5 | 24% | 419.6 | 3% |
| Profit after tax | 329.7 | 265.8 | 24% | 321.0 | 3% |
| TCI (Pre-minority) | 331.6 | 249.7 | 33% | 338.2 | (2%) |
| Return ratios | |||||
| Return on assets | 2.9% | 2.6% | 2.9% | ||
| Return on equity | 20.5% | 19.7% | 21.1% | ||
| Per share | |||||
| Earnings per share (EPS) | 8.7 | 7.0 | 24% | 8.5 | 2% |
| Book value per share (BVPS) | 174.2 | 145.6 | 20% | 165.3 | 5% |
| Asset quality | |||||
| Gross NPA | 2.6% | 2.2% | 3.2% | ||
| Net NPA | 1.5% | 1.0% | 1.8% | ||
| Balance sheet | |||||
| Off-book to AUM | 39% | 34% | 38% |
*excluding Fair value changes
Mr. Nirmal Jain, Managing Director, IIFL Finance Ltd., remarked on the financial results: “FY23 has begun well. Credit demand for retail loan products is picking up. Hike in interest rate till now, has not had any significant impact on credit demand or performance. India’s macro economy has been responding positively to the interventions by government and central bank. While good monsoon and downward trend in the commodity prices, augur well for the Indian economy, risk factors for growth continue to be inflation leading to interest rate hikes and adverse global geo- political developments. We are excited about ADIA’s equity investment to bolster our housing finance business. Our long- term strategy of expansion of physical network and attaining digital domain depth remain on track. We are optimistic about outlook for the NBFC sector and the company’s robust competitive position in the sector.”
Financial performance review
IIFL Finance had loan assets under management (loan AUM) of Rs 52,761 Cr as at June 30, 2022, with the home loans segment constituting 35%, gold loans 32%, business loans 15% and microfinance loans 12% of the total AUM.
The company’s annualized ROE and ROA for Q1FY23 stood at 20.5% and 2.9% respectively. Core pre-provision operating profit stood at Rs. 674 Cr. for the quarter up 32% y-o-y. Average borrowing costs for the quarter declined 9 bps q-o-q and 48 bps y-o-y to 8.5%.
95% of our loans are retail in nature and 67% of our retail loans (excluding gold loans which are not classified as PSL loans) are PSL compliant. The assigned loan book stood at Rs 14,577 Cr. Besides, there are securitized assets of Rs 1,957 Cr. Apart from securitization and assignment, we have co-lending book of Rs 3,842 Cr.
GNPA stood at 2.6% down from 3.2% q-o-q and NNPA stood at 1.5% down from 1.8% q-o-q, as at June 30, 2022. With implementation of Expected Credit Loss under Ind AS, provision coverage on NPAs stands at 137%.
Total CAR stood at 22.8% including Tier I capital of 15.3% as at June 30, 2022, as against minimum regulatory requirement of 15% and 10% respectively
The total presence of branches stood at 3,595 as at the end of quarter, spanning the length and breadth of the country.
Business segment review
Home Loans: At the end of the quarter, retail home loan assets grew by 26% y-o-y and 5% q-o-q to Rs 18,618 Cr. The primary focus in this segment is on affordable and non-metro housing loans. Over 55,700 customers were benefitted with a subsidy of more than Rs 1,300 Cr under the Pradhan Mantri Awas Yojana – Credit Linked Subsidy Scheme.
Gold Loans: As of June 30, 2022 the gold loan AUM grew to Rs. 17,130 Cr, showing a strong growth of 29% y-o-y and 6% q-o-q. Gold loans are provided through our widespread presence in 1,313+ cities across 22 states to salaried, self-employed and MSME customer segments.
Microfinance: The microfinance loan AUM stood at Rs. 6,276 Cr, up 43% y-o-y and 2% q-o-q, as at June 30, 2022. The microfinance customer base stood at 17.9 lakh customers.
Business loans: Secured business loan AUM grew by 6% y-o-y to Rs. 5,760 Cr. whereas unsecured business loan AUM grew by 12% y-o-y to Rs. 1,884 Cr.
Construction and Real Estate: Construction and real estate AUM stood at Rs. 2,487 Cr, down 11% y-o-y and 14% q-o-q as at June 30, 2022.
Liquidity position
Cash and cash equivalents and committed credit lines from banks and institutions of Rs 5,520 Cr were available as on June 30, 2022. During the quarter, we raised Rs 1,345 Cr through term loans, bonds and refinance. Additionally, loans of Rs 3,210 Cr were securitized and assigned.
IIFL OPEN Fintech Private Limited joint venture
IIFL Finance has entered into a joint venture with OPEN, which is the 100th unicorn of India and the largest SMB (Small and Mid-sized Business) Neo-bank. OPEN has integrated with 17 large banks and has an existing customer base of 2 million+ merchants. IIFL Finance’s existing lending book and infrastructure will be used by Open to offer innovative lending solutions to these merchants on their platform. This Joint venture will also give access to user’s business transaction leading to better insights for underwriting decisions and it will lead to growth in IIFL Finances’ lending book by offering credit solutions to Open’s existing 2 million merchant base. The joint venture’s neo banking product for IIFL and digital loan products for Open customers are under beta testing and are expected to be launched in the current quarter (Q2FY23)
ADIA subsidiary investment in IIFL Home Finance approved by the Board of Directors
During the quarter, the Board of Directors of IIFL Home Finance Limited approved transaction involving investment by wholly owned subsidiary of Abu Dhabi Investment Authority (ADIA) of Rs. 2,200 Crore for a 20% stake in IIFL Home Finance. IIFL Home Finance Limited is one of India’s largest affordable housing finance companies with assets under management of ₹24,553 Cr as of June 30, 2022. Upon completion of preconditions as specified in the preliminary documents and on completion of the transaction, the investor will hold 20% in IIFL Home Finance. The deal consummation is expected soon after receiving approval from Competition Commission of India (CCI).