Shriram Finance posted a bigger-than-expected third-quarter profit on Friday, bolstered by growth in lending for commercial and passenger vehicle purchases and loans to small enterprises.
The non-bank lender’s adjusted profit rose 21.25% to 25.22 billion rupees ($274.9 million) in the quarter ended December 31, compared to an average analyst estimate of 24.15 billion rupees, as per data compiled by LSEG.
This was Shriram Finance’s first earnings report after Japan’s largest bank, MUFG, agreed to buy a 20% stake in the company for $4.4 billion in late December. Analysts have said the equity infusion would reduce the cost of funds for the non-bank lender and help increase its loan book in the next few years.
Indian lenders reported double-digit loan growth in the October-December period, supported by spending linked to the local festive season and sweeping consumption tax cuts.
Analysts at Centrum Broking said that auto sale volumes remained strong in this period. Festive season economic activity was robust, aided by a good monsoon, which boosted commercial vehicle sales, they added.
Segment-wise breakup
Loans for commercial vehicles, Shriram Finance’s biggest segment, rose 15%, while loans to medium and small businesses grew by 18.61% year-on-year.
Lending for passenger vehicle and two-wheeler purchases climbed about 21.84% and 12.73%, respectively. The four segments account for more than 87% of the company’s assets under management, which rose 14.63% to 2.917 trillion rupees at December-end.
Shriram Finance’s net interest income – the difference between interest earned on loans given out and paid on borrowings – rose 16.17% to 67.64 billion rupees.
Loans overdue by more than 90 days declined 2.96% year-over-year to 131.21 billion rupees. The net interest margin rose to 8.58% from 8.19% in the previous quarter.
