L&T Finance keeps its banking hopes alive

MUMBAI (TIP): L&T Finance Holdings (L&TFH) on Wednesday said that the company would look for the next opportunity to get into banking and would wait for the RBI guidelines before moving ahead. N Sivaraman, president and whole-time director at L&TFH, said while the company was disappointed at not getting a bank licence it would wait for the next opportunity as and when it comes. “We have to get the discussion around the licences guidelines, which RBI is going to follow. That needs to be understood before embarking on any other initiative.

There are opportunities available but at the moment we would wait for RBI to come up with guidelines. Everything else is speculation,” said Sivaraman. The consolidated profit after tax of L&TFH (excluding exceptional items) was hit by higher provision costs. For FY14, the consolidated profit after tax grew 7% to Rs 597 crore from Rs 558 crore last year. Consolidated PAT for the quarter stood at 187 crore, again up 7% from Rs 175 crore last year.

“Provisions had an impact on profit growth. Our gross non-performing assets have increased from 2.29% of loans to 3.18%,” said Sivaraman. He attributed the rise in bad loans to a ‘tight economic environment’. According to Sivaraman, a stable government with good investment philosophy would boost the economy and improve prospects for the company. The NPAs are in accounts of corporates who are developers for infrastructure projects.

Defaults were also high in the construction and commercial vehicle segments. When asked about fresh investments, Sivaraman said that the company was focused on its existing business and was not looking at putting capital in any new activity. “Given the challenging environment, we continue to focus on building a quality portfolio by being cautious in credit selection and containing credit costs on our existing assets through aggressive asset monitoring. We expect to maintain an overall book growth at 15% to 20%,” he said.

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