The company has showed moderation in Net Interest Margin (NIM) to 4.44% in Q1FY2018. The interest spreads of the company declined to 2.76% in Q1FY2018 from 3.47% in the corresponding quarter last year.

Quarterly performance

The company has posted 4% decline in income from operations at Rs 6779.82 crore in the quarter ended June 2017. Other income improved 76% to Rs 152.08 crore. Total income fell 3% to Rs 6931.90 crore in the quarter ended June 2017. The interest expense declined 3% to Rs 4156.17 crore. Net Interest Income (NII) of the company declined 7% to Rs 2764 crore in Q1FY2018.

The employee expenses jumped 52% to Rs 38.44 crore, while the other expenditures declined 7% to Rs 170 crore in the quarter ended June 2017. The ensuing Gross Profit stood at Rs 2567.29 crore in the quarter ended June 2017, showing a decline of 4% on yoy basis.

The depreciation during the quarter under review stood at Rs 1.19 crore compared to Rs 1.18 crore in Q1FY2017.

The provisions increased to Rs 412.71 crore in Q1FY2018 from Rs 173.89 crore in Q1FY2017. The NPAs provisions surged to Rs 251.31 crore from Rs 110.95 crore in Q1FY2017, Standard assets were higher at Rs 46.28 crore (against write back of Rs 17.91 crore in Q1FY2017). The restructured advances provision were lower at Rs 94.62 crore (Rs 107.57 crore), but provisions for diminution in fair value of investment increased to Rs 20.49 crore in Q1FY2018 against write back of Rs 26.94 crore in Q1FY2017.

The Profit before Tax declined 14% to Rs 2153.39 crore in the quarter ended June 2017. The Tax expense during the quarter under review fell 7% to Rs 724.80 crore. PAT dipped 17% to Rs 1428.59 crore in Q1FY2018 over Q1FY2017.

Highlights:

Loan assets of the company increased 12% to Rs 252746 crore at end June 2017 compared to Rs 226538 crore at end June 2016.

Outstanding sanctions of the company (excluding R-APDRP) stood at Rs 184324 crore at end June 2017. Disbursement of the company (excluding R-APDRP) increased 66% to Rs 12849 crore in Q1FY2018 compared to Rs 7754 crore in Q1FY2017.

NIM of the company declined 54 bps yoy to 4.44% in Q1FY2018. The yield on assets eased 86 bps to 11.07%, while cost of funds fell only 15 bps yoy to 8.31%.

GNPA spiked 912 bps yoy to 12.46%, while NNPA galloped 782 bps yoy to 10.48% at end June 2017, while GNPA and NNPA was steady compared with 12.5% and 10.55% end March 2017.

Capital Adequacy Ratio stood at 19.54% at end June 2017 compared to 21.10% a year earlier.

Outstanding Borrowings increased by 5% to Rs 204765 crore at end June 2017, driven by bonds borrowing rising 10% to Rs 188799 crore at end June 2017. Term loans declined 28% to Rs 7240 crore, while short-term loans also fell 34% to Rs 8726 crore at end June 2017.

Book value of the company stood at Rs 143.85 per share at end June 2017. Adjusted Book value (net of NNPA and 25% of restructured advances) was negative at Rs 5.92 per share at end June 2017.

Annual Financial Performance

For the year ended March 2017 (FY2017), Power Finance Corporation reported 3% decline in Income from Operations at Rs 26270.08 crore, while interest expenses were flat at Rs 16459.27 crore, leading to a 9% dip in NII to Rs 10165 crore. Other income increased 54% to Rs 748.49 crore. The Staff cost rose 27% to Rs 114.97 crore, while the other expenditure jumped 21% to Rs 235.41 crore. The ensuing Gross Profit fell 5% to Rs 10208.92 crore in FY2017.

The Depreciation stood at Rs 5.56 crore, while provisions trebled to Rs 5093.57 crore, causing 44% dip in the profit before Tax to Rs 5109.79 crore in FY2017. The Tax expense increased 1% to Rs 2983.40 crore. PAT plunged 65% to Rs 2126.39 crore in FY2017.

Notes:

Three loans assets having aggregate balance of Rs 383.37 crore have been classified as NPA in Q1FY2018. Consequently, interest income of Rs 6.65 crore accrued and remaining unrealized has not been recognized, while additional provision of Rs 37 crore been created on such loans.

A standard asset having balance of Rs 521.83 crore has been categorized as restructured standard asset, resulting in additional provisions of Rs 21.33 crore.

The company is following RBI prudential norms contained in RBIs NBFC-Systemically Important Non-Deposit taking Company and Deposit Taking Company (Reserve Bank) Directions 2016.