Shriram City Union reported a substantial decline in operating profit growth that was mainly led by low disbursements and low AUM growth.
Sharing his views and outlook, Lakshmi Narasimhan, executive director of Shriram City Union Finance, said, “The profit after tax (PAT) for nine months is far higher than the PAT for the entire year last year. So while the disbursements have come down, the loan book growth is about 9.6-10 percent. There is an improvement on the other operating parameters including opex and credit costs."
On loan book growth, he said, “When we had guided for 18-20 percent loan book growth, in actual sense we said that that is our regular level of growth and we should get to that in FY20 which is next financial year. As far as this year is concerned – if you look, upto Q2 we were on track to get to those numbers. Q3 was definitely a dampener. So for this year, full year ended March 2019, we should be getting to mid-teens in terms of loan book growth.”
In terms of net interest margins (NIMs), Narasimhan said, “Q3 was always an aberration from all perspectives. We picked up some money at about 9.3-9.4 beginning December. As we speak during this quarter that come down by about 30 basis points (bps). So the additional borrowing is coming at about 9 percent but the contracted borrowing in any case will continue to carry the higher price. As far as Q4 is concerned, NIMs should be up by about 20-25 bps.”
Speaking about asset quality, he further mentioned, “We had consistent reduction in the gross non-performing assets (NPAs). We have seen that during the last three quarters, so as we head into the next financial year, we should look at a drop in the gross NPAs from the existing levels. Even in Q4, you should see a drop.”