Business highlights:

Outstanding loan portfolio continues rise at a strong pace of 14% to Rs 307425 crore at end December 2019. Disbursements rose 1% yoy to Rs 19856 crore in Q3FY2020, as disbursements in generation segment jumped 98% at Rs 9566 crore. However, short-term loans disbursements dipped 88% to Rs 111 crore and T&D (including RGGVY) declined 31% to Rs 9144 crore, while in Q3FY2020.

Sanctions moved up 7% to Rs 30610 crore in Q3FY2020, driven by surge in generation loans sanction by 22% to Rs 18082 crore, while the sanctions to T&D segment also jumped 39% to Rs 11137 crore in Q3FY2020.

With the decline in yield on loans, NIM declined 3 bps qoq and 42 bps yoy to 3.83% in quarter ended December 2019. Yield on loans declined 44 bps yoy to 10.61%, while cost of funds fell 31 bps yoy to 7.34% in Q3FY2020.

Fund raising declined 31% to Rs 20762 crore in the quarter ended December 2019, of which Rs 8859 crore raised through institutional bonds. Capital gains bonds served Rs 1597 crore, while about Rs 3706 crore were raised through foreign currency borrowings in Q3FY2020.

Outstanding borrowings increased by 16% from Rs 262740 crore at end December 2019. Institutional bonds increased 11% to Rs 147368 crore and foreign currency borrowing moved up 31% to Rs 40578 crore at end December 2019. However, the capital gains, Tax Free & Infra bonds were down 3% to Rs 35561 crore

Total Assets increased by 17% from Rs 326471 crore at end December 2019 up from Rs 279466 crore at end December 2018.

Asset Quality

Gross NPA stood at Rs 19,689 crore at end December 2019, while Net NPAs were Rs 9710 crore at end December 2019.

GNPA and NNPA ratio's stood at 6.40% and 3.16% at end December 2019 compared with 6.86% and 3.47% a quarter ago and 7.57% and 3.96% at end December 2018.

Book value of the company stood at Rs 195.0 per share at end December 2019, while adjusted Book value (factoring in NNPA) stood at Rs 145.9 per share at end December 2019.

Quarterly Performance

Income from Operations increased 14% to Rs 7531.58 crore for the quarter ended December 2019. The interest expense moved up 17% to Rs 4767.95 crore, pushing up the NII by 9% to Rs 2763.63 crore in quarter ended December 2019. Other income stood at Rs 121.41 crore and total income at Rs 2885.04 crore in the quarter ended December 2019. The operating expenses were Rs 461.14 crore and provisions Rs 78.33 crore in the quarter ended December 2019. The Profit before Tax increased 28% to Rs 2343.28 crore in the quarter ended December 2019. The effective tax rate declined 44 bps yoy to 29.9%. The Net Profit moved up 29% to Rs 1642.35 crore in the quarter ended December 2019.

Financial Performance 9MFY2020

For the nine-months ended December 2019 (9MFY2020), REC reported 19% increase in Income from Operations at Rs 21908.21 crore, while interest expense increased 22% to Rs 14055.25 crore, leading to a 13% rise in NII to Rs 7852.96 crore. Other income declined 80% to Rs 144.21 crore. The Staff cost moved up 20% to Rs 133.68 crore, while the other expenditure surged 44% to Rs 1220.48 crore. The Depreciation stood at Rs 6.85 crore in 9MFY2020 compared with Rs 5.14 crore in 9MFY2019, while provision for bad debts and standard assets jumped 58% to Rs 351.10 crore in 9MFY2020. Profit before Tax stood at Rs 6285.06 crore, indicating a decline of 3% on a yoy basis. An effective tax rate stood at 29.2% in 9MFY2020 compared with 30.3% in 9MFY2019. The net profit of the company fell 1% to Rs 4450.45 crore in 9MFY2020.