• Pre-Provision Operating Profit: 733 crore, up 21% YoY and 13% QoQ.

• Consolidated Loan Growth: 8% YoY and 4% QoQ to 66,964 crore.

• Core Loan Growth (Micro Finance, Gold Loan, Digital Loan): 7% YoY and 4% QoQ.

• Net Loss Before Non-Controlling Interest: Due to exceptional item related to investments.

• Gross NPA: 2.4%.

• Net NPA: 1.1%.

• Loan Book Assigned: 3,948 crore, down 24% YoY and 5% QoQ.

• Co-Ending Assets: 8,489 crore, down 20%.

• Quarterly Average Cost of Borrowing: Increased by 12 basis points YoY to 9.15%.

• Cash and Cash Equivalents: 3,882 crore.

• Net Gearing Ratio: 2.7.

• Annualized ROE: -5.2%.

• Annualized ROA: -0.7%.

• Capital Adequacy Ratio: 26.3%.

• Warning! GuruFocus has detected 2 Warning Signs with BOM:532636.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• IIFL Finance Ltd (BOM:532636) successfully lifted the RBI embargo on its gold loan business, demonstrating improved compliance and risk management.

• The company reported a 21% year-over-year increase in pre-provision operating profit, indicating strong operational performance.

• Demand for gold loans, MSME, and affordable home loans is picking up, supported by favorable economic conditions and government incentives.

• The company maintains a healthy liquidity position with adequate cash reserves to meet near-term liabilities.

• IIFL Finance Ltd (BOM:532636) has implemented risk-based pricing in its microfinance segment, aligning with regulatory expectations and improving credit quality management.

Negative Points

• The company reported an overall net loss due to an exceptional item related to provisioning for AI investments, impacting financial results.

• Microfinance business faces challenges with over-borrowing concerns and elevated credit costs, expected to stabilize only in the coming quarters.

• The gold loan book significantly declined from 36,000 crores to 12,000 crores due to the embargo, affecting overall loan growth.

• Increased stage two assets across loan segments indicate rising credit risk and potential future provisioning needs.

• The company's standalone credit costs were elevated, primarily due to stress in the MSME segment, impacting profitability.

Q & A Highlights

Q: When do you expect the write-back of the provision created, and how do you see the ramp-up of the gold loan business now that the ban has been lifted? A: Recovery of the underlying assets may take about 2 to 3 years. For the gold loan business, we expect to return to our original size by the March quarter, although market conditions will influence this timeline.