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Power Finance Corp: Extraordinary Income Boosts Earnings - Views on News from Equitymaster
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  • Mar 20, 2017 - Power Finance Corp: Extraordinary Income Boosts Earnings

Power Finance Corp: Extraordinary Income Boosts Earnings
Mar 20, 2017

Power Finance Corporation (PFC) declared its results for the third quarter of financial year 2016-17 (3QFY17). The institution has reported a 0.5% YoY fall in net interest income and 23% YoY rise in net profits.

Performance summary
  • Loan sanctions grew by a robust 64% YoY in 3QFY17 and 52% YoY in 9mFY17.
  • However, loan disbursements have been at a much slower pace - rising 13% YoY and 21% YoY in 3QFY17 and 9mFY17, respectively. Loan assets grew by a muted 3% YoY during the 9mFY17 due to prepayment of discom loans under the UDAY scheme.
  • Net interest income fell by 1.5% YoY in 3QFY16 on a marginal decline in interest income during the quarter. For 9mFY17, net interest income was marginally up by 1.2% YoY.
  • Net interest margins (NIMs) contracted by 0.24% YoY to 4.74% in 3QFY17 on a steeper fall in yield on assets. For 9mFY17, NIMs reduced by 0.3% YoY.
  • Other income surged 18 folds and nine folds in 3QFY17 and 9mFY17 respectively.
  • Backed by a steep rise in other income earned coupled with lower provisioning, profit before tax increased by 15% YoY and 9% YoY in 3QFY17 and 9mFY17, respectively.
  • At the net level, earnings recorded a jump of 23% in 2QFY17 aided by extraordinary income of Rs 1.2 billion earned during the quarter. For 9mFY17, net profits were up by 14% YoY.
  • Net NPA to advances ratio increased to 2.3% in 3QFY17 as compared to 1.6% in 3QFY16. But on a sequential basis, the NPA ratio has improved from a peak Net NPA ratio of 2.7% recorded in 1QFY17.
  • Capital adequacy ratio (CAR) stands at a healthy 22.3% of which Tier I ratio is 19.2% as at the end of 3QFY17.

    Standalone Financial Performance Snapshot
    Rs (m) 3QFY16 3QFY17 Change 9mFY16 9mFY17 Change
    Interest Income 69,350 69,020 -0.5% 206,140 209,230 1.5%
    Interest expended 40,650 40,750 0.2% 120,110 122,960 2.4%
    Net Interest Income 28,700 28,270 -1.5% 86,030 86,270 0.3%
    Net interest margin 4.98% 4.74% 5.12% 4.85%
    Other Income 30 530 1666.7% 210 1,840 776.2%
    Operating expense 360 580 61.1% 2,560 3,020 18.0%
    Provisions and contingencies 4,830 1,200 -75.2% 11,120 5,950 -46.5%
    Profit before tax 23,540 27,020 14.8% 72,560 79,140 9.1%
    Extraordinary items -190 1,170 -1,650 590
    Tax 7,530 8,690 15.4% 22,370 24,370 8.9%
    Effective tax rate 32.0% 32.2% 30.8% 30.8%
    Profit after tax/ (loss) 15,820 19,500 23.3% 48,540 55,360 14.1%
    Net profit margin (%) 22.8% 28.3% 23.5% 26.5%
    No. of shares (m) 2,640
    Book value per share (Rs)* 141.2
    P/BV (x) 1.0
    * (Book value as on 31st Dec, 2016)
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Dec 12, 2017 03:33 PM

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