Shriram Finance Q2 results: Net profit rises 13% to Rs 1,751 crore
Shriram Finance's net profit increased 13% year-on-year to ₹1,751 crore in the quarter ended September driven by strong demand for vehicle loans. Besides, net interest margin(NIM) improved during the quarter as the company reduced the excess liquidity on its books.
Commercial vehicle loan disbursements increased 14%, construction equipment 22%, and micro medium and small enterprises (MSMEs) increased 30% year-on-year.
The company's NIM which is the difference between the yield it earns on loans and that it pays for funds, improved to 8.93% from 8.26% a year ago despite an increase in finance costs which rose 12% to ₹3,622 crore from ₹3,234 crore a year ago.
Chief executive YS Chakravarti said the company could improve its margins because it could pass on the higher cost of funds to customers in the personal loan and passenger vehicle segments and as it drew down on the liquidity buffer that it had built post-Covid. The company now has a three-month liquidity buffer of ₹12,000 crore, down from ₹14,000 crore in June.
«We expect demand for loans to continue because the economic scenario is improving and also because most of our loans are asset producing and not for consumption for which demand remains strong,» he said.
The company increased its provisions on impaired assets by 26% to ₹1,129 crore from ₹898 crore a year ago.
Chakravarti said the company consciously chose to settle and close down some doubtful loans during the quarter.
