Our loan book has gotten quite diversified: V Vaidyanathan, Founder & Chairman, Capital First

our-loan-book-has-gotten-quite-diversified-v-vaidyanathan-founder-chairman-capital-firstVaidyanathan, Founder & Chairman, Capital First speaks to ET Now on the kind of revenue they earned, and their outlook on various portfolios they manage under the aegis of their company. Edited excerpts 

ET Now: What has been your experience in what is arguably the most questionable quarter for almost all the companies in your space at least to people’s mind before the earnings came in and how do you expect calendar year 17 to shape up? 
V Vaidyanathan: Our quarter was really very good. Our loan book actually grew by 25 per cent overall to 18,800 crores and the retail loan book for Capital First has now grown to 17,000 crores which is a growth of about 42 per cent over the last year. The profits of the company were up 42 per cent, our nine months profit is 168 crore which is more than the profit of the entire year of the last year and compared to nine months last year, the profit is 119 crores so that is a growth of 42 per cent. Broadly I can say that the numbers are looking quite good. The important thing back to your question about how the demonetisation impact was, the asset quality continue to hold very well. Our gross NPA was only 0.97 per cent and the net NPA was only 0.37 per cent. 

Capital First Personal Loan

ET Now: Q4, the benefit of the viewers give us how quarter three shaped up both the NII and the PAT numbers on YoY basis. 
V Vaidyanathan: The NII plus fee income for the quarter three FY16 was Rs 263 crore and for Q3 FY17 was 428 crore and the profit after tax in Q3 FY16 was 44.5 crore and in this year in this quarter Q3 of FY17 it is 61.4 crore which is up 38 per cent. So nine-month profit up 42 per cent, Q on Q quarter profit is up 38 per cent and rest of the numbers as I described to you. 

ET Now: What is going right, what segments are showing the growth, is there a revision of targets that is happening post the kind of performance that you are putting in? 
V Vaidyanathan: Last time when I talked to you for guidance for this financial year ending we were probably expecting it to end somewhere around 19000-20000 crore. 20000 crore of loan book as of March ending looks pretty much in the bag because our loan book is already 18800 crore. The other thing is that we were continuously this quarter we got some more repayments of the wholesale loans, the large developer loans and that book has shrunk quite sharply therefore now the retail book has now become over 91 per cent of the overall book. 

Deutsche Bank Loan against Property

So that way the loan book has gotten quite diversified. So really our guidance, let me just say that we will maintain our guidance or probably on disbursal front looks a little better. As far as the profit numbers are concerned, again looking quite good. If I were to just guide a picture for the full financial year let me say that last year our profits were 160 crore which was up compared to the previous year which was 100 crore. Now this year up 40 per cent over the last since what we have guided for and I think it is pretty comfortable as far as the way we are looking at things. 

ET Now: What are your capital raising plans and what do the NIMs stand at and outlook? 
V Vaidyanathan: No, there are no capital raising plans at all. We have just raise 340 crores from GIC Singapore the sovereign wealth fund so that takes our capital adequacy to 21.05 per cent so really beyond 21 per cent there is no need for capital. Net interest margin is looking quite healthy it is upward of 9 per cent. We think that NIMs of 9 per cent plus should continue because the businesses we are in are rather niche and they are let me say a bit at bottom of the pyramid so in that space a 9 per cent plus is a reasonable NIM to have. 

Deutsche Bank Home Loan

And on top of it of course we must be aware that in that those businesses the operating costs are relatively higher but even adjusting for such operating costs these businesses are quite profitable which is why we are seeing our profits growing 40 per cent quarter-on-quarter. To your earlier question I must point out that this quarter disbursals by the way compared to the previous quarter was down 30 per cent so the impact of demonetisation did not show up in the form of asset quality at all but certainly it showed up in the form of reduced disbursals because clients were not willing to borrow in this quarter because of their own things they were dealing with. 

Our assessment is that by January, the ongoing month, February-March things are fast returning to normal even on the disbursement front.

Source: Economic Times