Can Fin
Homes conducted a conference call 18 October 2023 to discuss its financial
results for the quarter ended September 2023. Suresh Iyer. MD and CEO of the
company addressed the call:
Highlights:
The disbursements
of the company have declined on a year on year basis due to change in the
processes, checks and controls. However, the company has exhibited growth in disbursements
on sequential basis.
The company
is looking at raising the ticket size as well as focusing on builder finance
and its witnessing good results on this front.
The
company expects the disbursements to pick up going forward and expect to
recover some of the losses of H1FY2024 during better performance in H2FY2024.
The GNPA
ratio for the non-restructured loan book is steady at 0.57% end September 2023
compared with 0.55% end March 2023.
However,
the slippages in the restructured loan book have been higher at 14% against
earlier estimate of 10% causing overall increase GNPA ratio in Q2FY2024.
Thus,
the company has created additional management overlay provisions of Rs 17.28
crore on the restructured loan book in Q2FY2024 in addition to Rs 17 crore in Q4FY2023.
Out of
the restructured loan book of Rs 685 crore, about 450 crore has come out of the
moratorium at end June 2023 and 14% of that at Rs 64 crore has slipped to the NPA
category in Q2FY2024.
Further
Rs 216 crore of restructured loan book has come out of moratorium in Q2, which
may contribute to rise in NPAs in Q3FY2024. The balance restructured book is
expected to come of moratorium in October 2023 and November 2023.
The
company has overall Rs 85 crore provisions on the restructured loan book and
which would be more than sufficient to take care of the book.
The
provision coverage ratio of the company has increased to 57% end September
2023.
With
regard to the fraud at Ambala branch, the company has a scanned all the
branches and the event was found to be one off at Ambala branch. The fraud amount
was at Rs 39.67 crore against earlier reported level of Rs 38.5 crore. The
company has also created full provisions for this fraud in Q2FY2024.
The company
has witnessed healthy improvement in the margins as well as spread in Q2 as Rs 5700
crore of loan book has witnessed repricing. The company still has Rs 6000 crore
of loan book to witness repricing in Q3FY2024.
The
bank is targeting it achieve disbursements of Rs 10000 crore for FY2024.
The
long growth has slightly moderated to 16%, while the company expects growth to
pick up in the second half of FY2024.
The
company is maintaining the guidance of spread at 2.5% and the margins at 3.5%.
The
cost of funds was steady on sequential basis as the commercial papers
borrowings was a done at lower rates, compensating for slight increase in MCLR rate.
The NHB
borrowing sanctions comes in October and it will be utilized by the end of the
year which is the cheapest source of borrowing and help in reducing cost of
funds.
The
company has started scheme for good customer offering lower rates which would
help to contain the pre-payments and transfers.
The
company is targeting AUM growth of 20% for FY2025.
The competitive
rate and increase in ticket size would boost the growth
The
company wants to maintain its gearing ratio below 8 times. Any growth pick-up
and gearing goes beyond 8 times would require capital raising.
The company
has added 3 branches in Q2 and another 9 branches are in the various stages of
addition.
The credit
cost is expected at 10 bps for FY2024.
The cost
to income ratio is expected to rise 18-18.5% by end FY2024 and for FY2025 on
account of investments for technology transformation.
The company
is aims to maintain RoA above 2%.
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