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Power Finance Corp: Loan growth remains muted - Views on News from Equitymaster
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Power Finance Corp: Loan growth remains muted
Sep 27, 2016

Power Finance Corporation (PFC) declared its results for the first quarter of financial year 2016-17 (1QFY17). The institution has reported a flat 5% YoY growth in net interest income and 8.6% YoY rise in net profits.

Performance summary
  • Loan sanctions grew at a robust 76% YoY in 1QFY17 mainly in the generation segment that saw sanctions grow by 50% YoY.
  • However, loan disbursements remained flat during the quarter. Loan assets grew by a mere1.6% YoY for the quarter as a result of prepayment of discom loans under the UDAY scheme.

    Muted growth in disbursements
    (Rs m) 1QFY16 1QFY17 Change
    Sanctions 196,380 346,130 76.3%
    Disbursements 77,500 77,540 0.1%
    D / S 39% 22%
    Advances 2,214,520 2,249,700 1.6%
    Sanctions Breakup
    Generation 94% 81%
    Transmission 4% 1%
    Distribution 0% 0%
    Others 2% 18%
  • Net interest income grew by 5% YoY in 1QFY16.
  • Net interest margins (NIMs) contracted marginally by 0.2% YoY to 4.93% on slight fall in interest spreads. The interest spread earned declined to 3.48% in 1QFY17 as compared to 3.64% in 1QFY16.
  • Net profits grew by 8.6% YoY aided by lower provisioning and a 14 folds jump in the other income earned during the quarter.
  • Net NPA to advances ratio increased to 2.7% in 1QFY17 as compared to 1.07% in 1QFY16.
  • Capital adequacy ratio (CAR) stands at a healthy 21.1% of which Tier I is 17.9% as at the end of 1QFY17.

    Standalone Financial Performance Snapshot
    Rs (m) 1QFY16 1QFY17 Change
    Interest Income 67,470 71,030 5.3%
    Interest expended 39,550 41,690 5.4%
    Net Interest Income 27,920 29,340 5.1%
    Net interest margin 5.11% 4.93%
    Other Income 40 560 1300.0%
    Operating expense 1,810 2,020 11.6%
    Provisions and contingencies 2,480 1,740 -29.8%
    Profit before tax 23,670 26,140 10.4%
    Extraordinary items -730 -1,240 69.9%
    Tax 7,170 7,780 8.5%
    Effective tax rate 30.3% 29.8%
    Profit after tax/ (loss) 15,770 17,120 8.6%
    Net profit margin (%) 23.4% 24.1%
    No. of shares (m) 2,640
    Book value per share (Rs)* 252.0
    P/BV (x) 0.5

    * (Book value as on 30th June, 2016)

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