Sundaram Finance Q1FY22 net profit up by 16% at Rs192cr

Gross stage III assets as on June 30, 2021, stood at 4.25% as against 2.44% as on June 30, 2020, primarily due to the Wave 2-related lockdowns impacting economic activity, increased financial burden faced by customers due to Covid-driven healthcare expenditures and the restrictions placed by the company on staff to work from home through much of the quarter.

Aug 10, 2021 04:08 IST India Infoline News Service

Result Analysis
The Board of Directors of Sundaram Finance Ltd. (SFL) approved the unaudited standalone and consolidated financial results for the quarter ended June 30, 2021, at its meeting held on August 9, 2021, in Chennai.

Profit after tax registered a 16% rise in Q1 FY22, with net profit at Rs192cr as against Rs166cr in Q1FY21.

Disbursements for Q1 FY22 recorded a growth of 122% to Rs. 2,060 crores as compared to Rs. 929 crores registered in the corresponding quarter of the previous year. Gross stage III assets as on June 30, 2021, stood at 4.25% as against 2.44% as on June 30, 2020, primarily due to the Wave 2-related lockdowns impacting economic activity, increased financial burden faced by customers due to Covid-driven healthcare expenditures and the restrictions placed by the company on staff to work from home through much of the quarter.

The second wave of the Covid-19 pandemic disrupted operations through the first quarter. The staggered lockdowns across various regions were in effect between middle of April 2021 and middle of June 2021. Northern, western and central regions were impacted in the early part of this window and most regions in south India were in lockdown till nearly the end of June 2021. Customers were deeply impacted by the pandemic both on business activity as well as on the personal healthcare front, incurring substantial healthcare-related expenditures. Employees were also impacted, and the company placed the safety and welfare of its staff as the highest priority.

“Given the intensity and pace with which Wave 2 of the pandemic affected the country, we privileged the safety and health of our employees and their families over business priorities. We went into a work from home mode across most of our network for 6-8 weeks of the first quarter of this financial year,” said Harsha Viji, Executive Vice Chairman, SFL.

“As activity resumed in July, we have witnessed a strong recovery in our collections and recovery efforts as well as disbursement activity across most regions. The strength of our customer relationships and the quality of our credit filters have stood us in good stead. While uncertainties around a third wave remain, the pace of vaccination and our own readiness in adjusting to a post-Covid world gives us optimism and confidence about the journey ahead,” said Rajiv Lochan, Managing Director, SFL.   

Standalone Performance Highlights for Q1 FY22 
• Disbursements for Q1 FY22 recorded a growth of 122% to Rs. 2,060 crores as compared to Rs. 929 crores registered in Q1 FY21.
• The assets under management stood at Rs. 29,823 crores as on 30th June 2021 as against Rs. 29,580 crores as on 30th June 2020.
• Pursuant to RBI’s notification on Resolution Framework 2.0 related of advances to customers, assets totaling Rs. 88 crores, about 0.31% of principal outstanding, were restructured in June 2021.   The total restructured assets were Rs. 1,395 crores, about 4.87% of principal outstanding as on 30th June 21.
• Gross stage III assets as on 30th June 2021 stood at 4.25% with 27% provision cover as against 2.44% with provision cover of 40% as on 30th June 2020. Net stage III assets as of 30th June 2021 closed at 3.12% as against 1.48% as on 30th June 2020.
• Gross NPA and Net NPA as on 30th June 2021 stood at 4.59% and 3.38% respectively when compared to 2.78% and 1.79% as on 30th June 2020.
• Cost to income ratio closed at 31.5% in Q1 FY22 as against 31.6% in Q1 FY21.
• The deposit base stood at Rs. 4,078 crores as on 30th June 2021, a net accretion of Rs. 57 crores.
• Profit after tax registered a 16% rise in Q1 FY22, with net profit at Rs. 192 crores. The company had registered a net profit of Rs. 166 crores for the quarter ended 30th June 2020.
• Return on assets (ROA) for Q1 FY22 closed at 2.2% against 1.9% for Q1 FY21. Return of equity (ROE) was at 12.2% for Q1 FY22 as against 11.7% for Q1 FY21. If we exclude investments in subsidiaries and group companies, core ROE was at 16.7% for Q1 FY22 as against 16.4% for Q1 FY21.
• Capital Adequacy Ratio stood at 23.5% (Tier I – 16%) as of 30th June 2021 compared to 17.7% (Tier I – 12.7%) as of 30th June 2020.

Consolidated Performance Highlights for Q1 FY22
The consolidated results of SFL include the results of its standalone subsidiaries Sundaram Home Finance, Sundaram Asset Management and joint venture company Royal Sundaram General Insurance.
• The assets under management (AUM) in our lending and general insurance businesses stood at Rs. 45,832 crores as on 30th June 2021 as against Rs. 45,603 crores as on 30th June 2020. The assets under management of our asset management business stood at Rs. 42,621 crores as on 30th June 2021 against Rs. 33,531 crores as on 30th June 2020.
• Profits after tax registered a 6% rise in Q1 FY22, with net profit at Rs. 285 crores compared to profit after tax of Rs. 269 crores for the quarter ended 30th June 2020. 

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