Shriram Finance’s consolidated net profit increased by 4% to Rs 1,874 crore in the quarter ended December 2023 due to strong loan growth, even as the company hiked provisions during the quarter.
The company’s assets under management increased 21% to Rs 2.14 lakh crore due to over 30% growth in loans in the passenger vehicle, MSME and gold loan segments which helped increased the net interest income (NII) by 17% to Rs 5,275 crore in December 2023.
However, a 37% increase in provisions for impairments impacted profit growth. Provisions increased to Rs 1259 crore from Rs 919 crore a year ago as the company hiked its provision coverage ratio to 53% from 51% a year earlier.
Vice chairman Umesh Revankar said the hike provision was in line with the company’s strategy to increase its coverage ratio, even though asset quality has improved. The company’s net NPA reduced to 2.72% from 3.20% a year earlier.
“The provision increase was as per the guidelines. We expect the loan growth to continue even in the current quarter. We also expect to maintain our margins despite the rise in cost of funds as we have been able to pass on the increased cost to our customers,” Revankar said.
Net interest margins which is the difference between the yield on advances and interest paid on funds improved to 8.99% from 8.52% a year ago.
