Edelweiss Financial Services on Wednesday reported a 49% year-on-year (y-o-y) drop in consolidated net profit to Rs 134 crore in the June quarter of FY20, as impairment on financial instruments shot up 136%. As a conservative measure, the company is stepping up and front loading credit costs in H1FY20, it said in a presentation.
The company’s total credit book, including distressed credit, stood at around Rs 42,599 crore at the end of Q1FY20, down 31% on a y-o-y basis. The retail credit book fell 8% y-o-y to Rs 16,981 crore , while the corporate credit book shrunk 16% to Rs 16,987 crore. Total income rose 3% to Rs 2,513 crore.
Rashesh Shah, chairman and CEO, Edelweiss Financial Services, said, “On the credit side, asset quality has been a concern and therefore we have started frontloading our credit costs in a transparent manner. We are fortunate to have teams with strong resolution capability focused on ensuring weak assets with good collateral value are resolved in the least time and cost. We have been monitoring liquidity very closely, consciously preserving liquidity at the cost of growth. Our collateral values remain strong. We have a strong capital base, a low debt equity ratio, and capital adequacy of close to 20%.”
Edelweiss Financial’s gross non-performing asset (NPA) ratio stood at 2.33%, up from 0.83% in Q4FY19, while its net NPA ratio worsened to 1.24% from 0.83% a quarter ago. Total provision cover fell to 111% from 120% in the quarter ended March.
The company’s distressed credit business has capital employed of Rs 8,631 crore and recoveries stand at Rs 1,076 crore for Q1FY20.
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Source: Financial Express