Aditya Birla Capital conducted a conference call on 03 November 2023 to discuss the financial results for the quarter September 2023. Vishakha Mulye, CEO of the company addressed the call:

Highlights:

The company expected the positive microeconomic trend to continue and the economy to perform well in FY2024. The company continues to follow one ABC one P&L policy.

The company has recorded 41% growth in lending portfolio to Rs 1.09 lakh crore end September 2023.

The overall asset management of the company has increased 12% to over Rs 4 lakh crore.

The consolidated revenues moved up 22% to Rs 8831 crore in Q2FY2024. PBT has jumped 40% to cross Rs 1000 crore. The net profit has moved up 44% to Rs 705 crore in Q2FY2024.

The company continues to enhance digital offering and it has onboarded 78% of the mutual fund customers, 80% of the life insurance customers and 85% of the health insurance customers.

The company is also focused on expanding its a physical footprint with the focus on tier 3 and 4 cities.

The branches of the company increased by 71 branches to touch 1403 branches across business end September 2023

The NBFC business continues with strong momentum in the disbursements and granularisation of the business. The disbursements of the NBFC business surged 32% to Rs 16477 crore in Q2FY2024.

NBFC loan Book increased 44% yoy and 9% on sequential basis to Rs 93520 crore end September 2023. The business has record healthy RoA of 2.51% and RoE of 18% in Q2FY2024.

The company continues to build retail and SME portfolio and increase it share in the overall loan book. Retail and SME loan book has increased by 49% contributing two third of the overall AUM of the company.

The customer base of the NBFC increased 13% to 5.9 million end September 2023 from 5.3 million end September 2022. About 87% of the customer in the retail segment has a credit score of more than 700.

The margins of the NBFC company have increased yoy 6.87% in Q2FY2024.

The net profit of the NBFC business increased 53% to Rs 548 crore. The company has exhibited consistent improvement in the asset quality.

The stage 2 and stage 3 combined has declined to 5.24% end September 2023 from 8.5% end September 2022. The stage 3 assets ratio has also declined to 2.64% from 3.53% last year, while the provision coverage ratio has improved by 520 bps yoy to 48.3% end September 2023.

The bank has added 42 branches in Q2FY2024 and 154 in last 12 months taking the branch count to 375 branches end September 2023.

The housing loan disbursements have surged 52% in Q2FY2024, while the loan Book has increased 23% to Rs 15439 crore. The business recorded RoA of 2.03% and RoE of 14.5% in Q2FY2024.

The customer base of the company increased 18% to 58400 end September 2024. The interest margin increased to 4.88% in Q2FY2024.

The share of NHB borrowings have increased to 21% end September 2023.

The unsecure loan portfolio is small in size and the ticket size is less than Rs 50000. The tenure is also low and the company is looking at a very calibrated growth in the segment.

The company is sufficiently capitalized for next 2 years.

With the product mix changing the company expect to deliver the guided level of the margins.

The company has invested in people, branches and technology for growth and it started to pay off.

The company aims to double loan book and improve RoA to 3.0% in next 3 years.

The write offs stood at Rs 369 crore in Q2FY2024 compared with 419 crore in the previous quarter. The write offs were mainly from the small ticket and unsecured loans.

The asset under management of the AMC business increased 10% yoy and 5% qoq to Rs 310899 crore, of which the equity segment contributed 42%. The passive funds AUM has increased by 64% to Rs 28438 crore end September 2023.

The net VNB margins of life insurance business as improved 195 BPS yoy and 240 bps qoq to 14.2% in H1FY2024.

The company expects to deliver VNB margins of 23%+ in FY2024.