Tata Capital: With the shift to retail, Tata Capital expects to post highest profit ever in FY22

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Mumbai: Tata Capital, the flagship financial services firm of the $ 103 billion aviation salt Tata group, expects to post its highest profit on record this fiscal year, after fine-tuning its loan portfolio to capitalize on growing retail demand and reducing exposure to lump sum business loans.

Consumer loans and mortgages would outstrip growth as they aim to expand the reach of Tier 3 and 4 cities and increase digital penetration.

Managing Director Rajiv Sabharwal said the company now has a solid foundation for growth over the next few years as it has granularized its loan portfolio.

“Tata Capital achieved its best profits last year. We expect the performance of FY 22 to be better than FY 21 … Widening our margins, reducing costs of credit and accelerating the pace of digitization while increasing the loan portfolio will be the main themes going forward, ”Sabharwal said.“ There is pent-up demand and we expect domestic consumption to increase. . The growth dynamic of the economy will be sustained. ”

The company recorded a net profit of 1,126 crore in fiscal year 2021.

Tata Capital is the holding company for the group’s three lending activities – Tata Capital Financial Services, Tata Capital Housing Finance and Tata Cleantech Capital – as well as three investment and advisory activities: Tata Securities, Tata Capital Singapore and private equity funds .

“Over the past three years or so our effort has been to make the loan portfolio more granular with personal loans being a dominant part and we have been largely successful in our strategy. Personal loans, including mortgages, now represent approximately 65% ​​of our loan portfolio. The rest of the loans are 20% business loans and 15% SME loans, ”Sabharwal said.

Tata Capital’s loan portfolio increased 8% to 83,044 crore in September 2021 from 77,219 crore in March 2021. Net interest margins plus fees improved to 6% from 5.5% in March 2021. during the same period.

Sabharwal said a better product mix and lower cost of funds helped increase the net interest margin. He expects credit costs to be in the current 80 basis point range, down from 3.7% in the first quarter when the economy shut down. One basis point is equal to 0.01 percentage point.

“Our gross NPA on an absolute basis has declined despite the growth of the loan portfolio, mainly due to better recoveries. Controlling credit costs and maintaining asset quality while increasing our portfolio remains our priority,” said Sabharwal said.

Since taking office as CEO in April 2018, Sabharwal has led the company’s backbone towards personal lending and consolidated the group’s guaranteed lending business which accounts for 80% of the company’s loans.

Gross ANP fell to 2.2% of loans from 2.5% six months earlier, as collections improved as the economy improved.

Sabharwal said the company has enough capital and doesn’t plan to raise funds anytime soon. She has always maintained that the call for stock market listing will be made by parent company Tata Sons.


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