Do Not See Any System Risk From IL&FS Default, Edelweiss Says
The liquidity crisis caused after a recent default by Infrastructure Leasing & Financial Services Ltd. will not lead to a systemic risk. That’s according to Edelweiss Financial Services Ltd. which expects loan growth for non-banking finance companies to moderate over the next 12 months.
Here are key takeaways from the Edelweiss’ Investor Meet 2018 by Morgan Stanley
- Management does not see any systematic risk on the asset side due recent liquidity crisis caused by the IL&FS event.
- It expects loan growth across NBFCs to moderate over next year.
- May increase liquidity cushion from 10 percent of assets to 15 percent.
- Asset quality deterioration in industry unlikely.
- Focus remains on wholesale credit via fee-based funds, rather than through its balance sheet.
- NCLT process taking time in the courts, do not expect inordinate delays.
- Realisable value of some assets going up, seeing higher bids for certain assets.
- Unsold residential real estate inventory levels declining.
- Commercial real estate continues to do better.
- Total expense ratio change for mutual funds to have negligible impact on profits.
- Remains bullish on opportunities in alternative assets.
- Expect cost to income ratio of 40 percent over the next two-three years as compared to 46 percent (excluding insurance) last year.