Equitas Holdings' NIM stable, disbursements up quater-on-quarter: PN Vasudevan
There was an increase in the vehicle finance credit cost in the second quarter.
We see good business growth in small business loans and vehicle finance. What is the outlook looking like for the rest of the year?
Our second quarter is somewhat good. We had a 33% growth in our advances compared to second quarter last year and our disbursements grew by 11% compared to 5% in the first quarter. In terms of PAT, we did take the benefit of the revised income tax norms that has come in now and for that, we had to write off our entire DTA (Deferred Tax Asset). It is about Rs 24 crore and the entire Rs 24 crore had to be written off in this quarter. That had a small negative impact on PAT, but for that, PAT would have been better.
What were the factors that led to the NIM expansion for you? Do you expect to see any further improvement in the second half?
Our NIM was more or less stable at about 8.8%. It has remained stable in the last two quarters. We will be filing the DRHP shortly for the IPO for the bank and as per the regulatory framework, we are not expected to give any forward guidance at this point in time. I do not think we are permitted to talk of the next two quarters. But we can say that our second quarter NIM has been stable compared to the first quarter.
What about slippages? They have seen an uptick and the asset quality has deteriorated as well. Is it going to continue to be an issue in the latter half of the year?
Our GNPA was 2.88% in the second quarter, compared to 2.75% in the first quarter and historically, generally the NPAs do rise in the first two quarters and tend to come down in the next two quarters (the second half of the year). We saw this trend even last year.
Disbursements too have declined on a sequential basis. Are you anticipating the slowdown to continue in the second half of the financial year?
Actually our disbursement went up. In the first quarter of this year, our disbursement was up by 5%, whereas in the second quarter, it actually went up by about 11%, So, quarter-on-quarter, the disbursements have actually gone up.
Credit cost was up this quarter. What is your guidance on credit cost, going forward for the rest of the year?
Since we are about to file the DRHP, we are not permitted to give any guidance. But I can give you some breakup for the increase in the credit cost. There was an increase in the vehicle finance credit cost in the second quarter. Compared to the first quarter, it was up by about Rs 7 crore and there is another increase of around Rs 3.5 crore, which is the increase in provision required, based on aging of certain part of the NPA. This was the component of the increase between the first and the second quarter. I am sorry, I would not be able to give you any guidance in terms of how it will move into the third and fourth quarter at this point in time.
You are prepping for the listing and cannot share much on certain things. Can you share any updates, plans, issue size?
We are in the process of filing the DRHP. We will able to communicate in a more comprehensive manner after we file the DRHP.