About 82% of the new customers of the company are onboard through digital channels in the quarter ended September 2020. The company has also reduced its cost of borrowing by 26 bps in Q2FY21. It has raised borrowings of Rs 1,861 crore in H1FY21. The company is very comfortable on the capital adequacy ratio of 21.6% at end-September 2020.

Referring to the housing finance segment, Mr Srinivasan says that in the housing finance business, the company is focused on granularization of the business. The disbursements in this business have reached 100% of the last year’s level in September 2020, while the disbursements in H2FY21 were at 72% of Q2FY20. The affordable housing segment accounts for 42% of the housing loan book. The construction book at 4% is a very small ticket- size loan book. The company is trending closer to the pre-Covid level collection efficiency at 94% in October 2020. The cost of borrowing of the company has declined by 57 bps on a yoy basis and 15 bps on a qoq basis. In the asset management business, the company expects to maintain a PBT to AUM ratio at 27 bps in H2FY21. In the life insurance business, the company expects to touch the double-digit level of VNB margins by year- end.

Maintaining that “we expect the combined ratio of the health insurance company to be below 110% by Q4FY21”, Mr Srinivasan adds, “At the same time, we are also targeting to achieve break-even by the last quarter of FY22. The company expects restructuring of loans at 1-2 % of the loan book. The Covid-19 provisions for NBFCs stand at Rs 139 crore and housing finance at Rs 30 crore.”

STRONG REVIVAL

Reviewing the performance of the company during the first half of fiscal 2021, Mr Srinivasan says the company has exhibited strong revival in business with the reopening of the economy. The consolidated income of the company has increased 14% on a sequential basis to Rs 4,879 crore and net profit has jumped 33% on a qoq basis to Rs 264 crore in Q2FY21. Life insurance individual first-year premium collection has increased 7%, significantly ahead of private players showing an 11% decline. The embedded value has increased 13.8 % on a yoy basis. The health insurance business of the company remained the fastest growing in its segment. Its gross written premium has jumped 75% to Rs 550 crore with the focus on retail business. The combined ratio declined to 129% from 155% last year.

Pointing out that “despite the volatile market environment, the AMC business has posted an 11% growth in assets under management with equity AUM rising at a faster pace of 13%,” Mr. Srinivasan adds, “The growth was supported by a strong focus on revival in retail, SIPs and B30 locations in the quarter ended September 2020. There is a strong improvement in AMC profitability with the PBT to AUM ratio rising to 27 bps from 24 bps last year. The NBFC credit growth remains soft amid very weak market conditions, while the focus remains on the key segments. Similarly, the housing book remained flat on a sequential basis and the focus continued on affordable housing segment. The NBFC disbursements have doubled on a sequential basis to Rs 2,598 crore in Q2FY21 and touched 64% of the last year’s level. The disbursements have returned to a pre-Covid level in September 2020 at Rs 1,108 crore. The company had done disbursements of Rs 1,118 crore in January 2020. The company is looking at the NBFC loan book growth of 5% for H2FY21 over the end- September 2020 level. Meanwhile, if the economy revives faster the company would look at a healthy loan book growth next year.”