The loan book growth was strong at 16% end December 2020. The gross profit growth was robust at 46%. Further, the provisions increased sharply, while net profit growth was still strong at 38% in Q3FY2021.

Business highlights:

Outstanding loan portfolio continues rise at a strong pace of 16% to Rs 357067 crore at end December 2020. Disbursements declined 6% yoy to Rs 18698 crore in Q3FY2021, as disbursements in generation segment declined 40% at Rs 5765 crore, while the T&D (including RGGVY) disbursements jumped 37% to Rs 12506 crore.

Sanctions declined 10% to Rs 27606 crore in Q3FY2021, driven by decline in generation loans sanction by 8% to Rs 16607 crore, while the sanctions to T&D segment also fell 17% to Rs 9295 crore in Q3FY2021.

With the decline in yield on loans, NIM declined 14 bps qoq and improved 22 bps yoy to 4.05% in quarter ended December 2020. Yield on loans eased 1 bps yoy to 10.61%, while cost of funds fell 14 bps yoy to 7.19% in Q3FY2021.

Fund raising declined 20% to Rs 16707 crore in the quarter ended December 2020, of which Rs 12359 crore raised through institutional bonds. Capital gains bonds served Rs 1210 crore in Q3FY2021.

Outstanding borrowings increased by 17% from Rs 307197 crore at end December 2020. Institutional bonds increased 17% to Rs 171832 crore and foreign currency borrowing moved up 7% to Rs 43514 crore, while capital gains, Tax Free & Infra bonds declined 8% to Rs 32638 crore end December 2020.

Total Assets increased by 16% from Rs 379193 crore at end December 2020 up from Rs 326471 crore at end December 2019.

Asset Quality

Gross NPA stood at Rs 18,221 crore at end December 2020, while Net NPAs were Rs 6947 crore at end December 2020. GNPA and NNPA ratio's stood at 5.10% and 1.95% at end December 2020 compared with 5.22% and 2.04% a quarter ago and 6.40% and 3.16% at end December 2019.

Book value of the company stood at Rs 211.4 per share at end December 2020, while adjusted Book value (factoring in NNPA and 25% of restructured advances) stood at Rs 176.2 per share at end December 2020.

Quarterly Performance

Income from Operations increased 18% to Rs 9042.13 crore for the quarter ended December 2020. The interest expense moved up 14% to Rs 5445.97 crore, pushing up the NII by 25% to Rs 3596.16 crore in quarter ended December 2020. Other income zoomed 119% to Rs 4.89 crore. The total income increased 25% to Rs 3601.05 crore in the quarter ended December 2020.

The operating expenses declined 87% to Rs 58.80 crore, while provisions jumped 832% to Rs 729.96 crore in the quarter ended December 2020. The Profit before Tax rose 20% to Rs 2810.05 crore in the quarter ended December 2020. The effective tax rate dipped 1044 bps yoy to 19.5%. The Net Profit rose 38% to Rs 2262.93 crore in the quarter ended December 2020.

Financial Performance 9MFY2021

For the nine months ended March 2020 (9MFY2021), REC reported 19% increase in Income from Operations at Rs 26242.28 crore, while interest expense increased 14% to Rs 16050.94 crore, leading to a 28% rise in NII to Rs 10191.34 crore. Other income moved up 112% to Rs 18.32 crore. The Staff cost declined 18% to Rs 110.22 crore and other expenditure dipped 75% to Rs 310.22 crore. The Depreciation stood at Rs 6.88 crore in 9MFY2021 compared with Rs 6.85 crore in 9MFY2020. Provision for bad debts and standard assets jumped 390% to Rs 1721.98 crore in 9MFY2021. Profit before Tax stood at Rs 8060.36 crore, indicating an increase of 28% on a yoy basis. An effective tax rate stood at 21.9% in 9MFY2021 compared with 29.2% in 9MFY2020. The net profit of the company declined 41% to Rs 6292.15 crore in 9MFY2021.