Q1 Results: L&T Finance Reclassifies Its Structured Finance Business

L&T Finance Holdings Ltd. said it has classified its structured finance and debt capital market into a “defocused” book because of their higher risk and lower returns.

“These are the businesses we do not wish to grow as they do not have the right risk-return paradigm,” Managing Director and Chief Executive Officer Dinanath Dubhashi said. “The asset quality or bad loan ratios (in these two verticals) are not any different from the rest of the books.”

L&T Finance plans to run down these businesses—worth around Rs 9,000 crore, or 9 percent of the total loan book—completely over the next two years, he told BloombergQuint in an interview.

The shift in focus, Dubhashi said, impacted loan disbursement, which fell 36 percent year-on-year in the June quarter. “However, the degrowth in disbursements in our focused business is just 7 percent, largely on account of careful lending in real estate sectors.”

L&T Finance Q1 Results 2019-20: Key Highlights (year-on-year)

• Net interest income rose 20.1 percent to Rs 1,389.9 crore.
• Net profit increased 7.5 percent to Rs 578.8 crore.
• Lending book grew 16 percent to Rs 99,904 crore.

Watch the full interaction with L&T Finance CEO Dinanath Dubhashi here: