The credit cost declined over a year ago level, but increased on sequential basis in Q1FY2017. The credit cost for the company fell to 238 bps (annualized) in Q1FY2017 compared with 359 bps in the corresponding quarter last year, but increased from 114 bps in preceding quarter.

The net spreads for the company plunged to 1.4% in Q1FY2017 compared with 2.9% in the previous quarter and 1.6% in the corresponding quarter last year.

Income from Operations increased 4% to Rs 1567.92 crore during the quarter ended June 2016, compared to the corresponding previous year quarter. Other Income jumped 33% to Rs 10.63 crore. The total Income moved up 4% to Rs 1578.55 crore, while interest expenses increased 10% to Rs 763.88 crore in the quarter ended June 2016.

The staff cost moved up 32% to Rs 210.39 crore, while other operating expenses increased 22% to Rs 173.23 crore. The ensuing operating profit dipped 17% to Rs 431.05 crore in the quarter ended June 2016.

Depreciation rose 12% to Rs 12.16 crore during the quarter under review. Provisions & write-off declined 27% to Rs 247.53 crore. The profit before tax increased 1% to Rs 171.36 crore. After accounting for taxation of Rs 61.22 crore and minority interest of Rs 2.50 crore, the net profit came in flat at Rs 107.64 crore in the quarter ended June 2016.

On a standalone basis, total Income increased 3% at Rs 1360.30 crore during the quarter ended June 2016, as against Rs 1316.30 crore in the corresponding period last year. The net profit declined 2% to Rs 87 crore during the quarter ended June 2016, as compared to Rs 89 crore during the corresponding period last year.

AUM of the company increased at steady pace of 11% to Rs 41662.2 crore at end June 2016. MMFSL currently has a network of 1172 offices. The company's customer base has crossed 4.25 million customers at end June 2016.

Asset Quality

GNPA increased to 10.70% of total asset at end June 2016 from 8.00% a quarter ago. NNPA ratio also increased to 5.40% from 3.20% a quarter ago. NPA coverage ratio declined to 52.30% at end June 2016 from 61.70% at end March 2016.

Mahindra Insurance Brokers (MIBL)

During the quarter ended June 2016, MIBL registered income at Rs 36.5 crore as against Rs 31.7 crore, registering a growth of 15% over the same period previous year. The Profit After Tax (PAT) registered was Rs 10.1 crore as against Rs 9.6 crore, registering a growth of 5% over the same period previous year.

Mahindra Rural Housing Finance (MRHFL)

During the quarter ended June 2016, MRHFL disbursed Rs 405 crore as against Rs 339.2 crore during the same period previous year, registering a growth of 19% over the same period previous year. MRHFL registered income at Rs 143.7 crore as against Rs 99.6 crore, registering a growth of 44% over the same period previous year. The Profit After Tax (PAT) registered a growth of 19% at Rs 8.1 crore as against Rs 6.8 crore for the same period previous year.

Book value of the company stood at Rs 116.49 per share on a consolidated basis and Rs 109.37 per share on a standalone basis at end June 2016. Adjusted book value on consolidated basis stood at Rs 79.19 per share and Rs 72.07 per share on standalone basis at end June 2016.

Annual Financial Performance:

For the year ended March 2016 (FY2016), MMFSL reported 9% rise in the Income from Operations to Rs 6553.87 crore, against the corresponding previous year period. Other Income increased 10% to Rs 43.65 crore. As a result, the total Income grew 9% to Rs 6597.52 crore. Interest expenses moved up 9% to Rs 2868.35 crore, while the operating expenses increased 25% to Rs 2459.35 crore leading the operating profits to decline 12% to Rs 1269.82 crore. Depreciation was flat at Rs 45.7 crore. PBT fell 13% to Rs 1224.12 crore. Tax provisions declined 8% to Rs 436.72 crore and the Minority interest grew 26% to Rs 15.11 crore. Net Profit declined 15% to Rs 772.29 crore in FY2016 over FY2015.

Other information:

The company shifted to 120 days NPA recognition norms as on 31 March 2016, which has resulted in additional provision of Rs 91.77 crore (including income de-recognition) as compared to quarter ended June 2015 with a consequent impact on profit before tax.

During the quarter, the company has reviewed the basis of estimating provision for NPAs and has considered estimated realisable value of underlying security (which confirms to the RBI norms) for loan assets to determine 100% provisioning for assets which are 24 months overdue. As a result, provision for the quarter ended June 2016 is lower by Rs 192.75 crore with a consequent impact on the profit before tax of the same amount.