IIFL Finance Reports Mixed Q1 FY25 Results

IIFL Finance reported a decline in net profit after tax by 28% YoY to ₹338 crore for Q1 FY25. PBT also decreased by 29% YoY to ₹436 crore. While the company witnessed growth in key segments like home loans and loans against property, the overall performance was impacted by factors such as a decline in gold loans and increased provisioning.

Business Segment Performance

• Home Loans: Strong growth of 23% YoY in AUM, driven by focus on affordable and non-metro housing.
• Microfinance: AUM grew by 17% YoY, with a customer base of 29.8 lakh.
• Gold Loans: Significant decline of 33% YoY in AUM due to market conditions.
• Loan Against Property: AUM grew by 23% YoY, indicating strong demand.
• Digital Loans: Rapid growth of 59% YoY in AUM, highlighting the company’s focus on digital lending.

Asset Quality and Capital Adequacy

GNPA and NNPA increased, leading to higher provisions. However, the provision coverage ratio stands at a robust 128%. The company maintains a strong capital adequacy ratio (CRAR) of 27.8%, surpassing regulatory requirements.

Liquidity and Funding

IIFL Finance reported a cash and cash equivalent position of ₹6,853 crore, supported by fundraising activities during the quarter.

Overall, IIFL Finance delivered a mixed performance in Q1 FY25. While certain segments exhibited strong growth, challenges in gold loans and increased provisioning impacted profitability. The company’s focus on retail lending, digital initiatives, and strong liquidity position are positive indicators for future growth.

Mr Nirmal Jain, Managing Director, IIFL Finance Ltd, commented on the results, “The recent RBI embargo on gold loans has impacted our financial performance during the quarter. However, we have diligently followed all RBI guidelines and are committed to full compliance. We have taken significant steps to strengthen our system, process management, and compliance risk and audit teams.

Our gold loan assets, being short tenure products, have demonstrated resilience under this trial by fire. Over a million customers have successfully closed their accounts and retrieved their jewellery, and we have repaid banks over ₹13,500 crore from asset liquidation, without any issues, showcasing the robustness of our asset quality and operations.”

Mr Kapish Jain, President and Group Chief Financial Officer, IIFL Finance Ltd, stated, “Our financial performance for the current quarter is hugely impacted by the ongoing embargo on our gold loan business with AUM in the gold business dropping by nearly 37% QoQ. During this period both the material subsidiaries have reported healthy performance both in terms of growth and profitability.”

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.