DHFL Q4 Results: DHFL Reports Rs 2,223 Crore Loss, NPAs Widen
DHFL’s loan book dropped to Rs 89,387 crore compared with Rs 92,165 crore a year ago.
Crisis-hit Dewan Housing Finance Corporation Ltd. said it aims to restart lending operations by August 2019 after the company reported a loss of Rs 2,223 crore for the quarter ended March 2019. The housing finance company had reported a profit of Rs 134 crore in the year-ago period and a Rs 313.60-crore profit in the quarter ended December.
Net interest income for the housing finance company stood at Rs 664.52 crore, as compared with Rs 458.8 crore a year ago. The company’s total income fell to Rs 3,057 crore, down 69 percent from Rs 9,936 crore a year ago.
Interestingly, despite having delayed their announcement by two weeks, the earnings for the quarter and full year are yet unreviewed and unaudited. DHFL has stated that the earnings published today, after a six hour-long board meeting, are as per accounting standards applicable since 2015/16. While the company adopted Ind AS on April 1, 2018, it doesn’t seem to have been able to complete the preparation of the financial statements for the quarter or year.
The Audit Committee has directed the management to place the audited Ind AS standalone and consolidated financial results under Regulation 33 of SEBI LODR on or before July 22, 2019.DHFL Statement
During the January-March period, the housing financier reclassified its wholesale loans portfolio and booked a net loss on fair value of Rs 3,190 crore. While that hurt profit, a deferred tax credit for the quarter, worth Rs 775 crore, helped limit the loss.
The company’s gross non-performing asset ratio rose to 2.74 percent as on March 31, from 0.96 percent in the year-ago period. NPAs stood at 1.12 percent in the preceding quarter. DHFL’s gross NPA ratio has been consistently rising since Sep. 30, as it grapples with a considerable liquidity crisis.
DHFL’s loan book dropped to Rs 89,387 crore compared with Rs 92,165 crore a year ago. Total assets under management rose moderately to Rs 1.19 lakh crore as on March 31, 2019.
DHFL Defaults On NCD Payments, Again
For the full year, DHFL announced total income of Rs 12,901 crore versus Rs 10,864 crore in the previous financial year 2017-18. Operating profit remained unchanged at Rs 2,378 versus Rs 2,331. The net loss in FY19 is Rs 1,036 crore against a profit of Rs 1,240 in FY18. These numbers too are unaudited.
Lenders to the housing finance company are currently working on a resolution plan to rescue it. BloombergQuint had reported on Wednesday that the resolution plan could include a change in ownership of DHFL, where lenders could end up owning majority equity and running its operations.
“The joint lender forum has also taken into account the need for recommencement of business by DHFL and commence originating new home loans. Banks would enable the infusion of necessary liquidity into the system. It is expected that DHFL will be able to restart its business in August 2019 and scale it up in the months ahead,” the company said in its statement to the stock exchanges.
The Road Ahead
The non- banking financial services company outlined the various steps it has taken to sell loan portfolios and monetise assets, including selling stakes in non-core businesses such as Aadhar Housing Finance Ltd. (9.15 percent), Avanse Financial Services Ltd. (30.63 percent) and DHFL Pramerica Asset Managers Pvt. Ltd (100 percent).
It said it is in discussions with Indian banks and international financial institutions to sell off its retail as well as wholesale portfolio, and is in discussions with the consortium of bankers / lenders to restructure its borrowings. Its promoters are also seeking to sell stake to an external investor.
It shared timelines for the debt restructuring and stake sale processes.
Debt Restructuring
- In advanced stage of submitting resolution plan
- The banks’ inter-creditor agreement will examine and firm up terms of the resolution process by July 25
- ICA to become operational before September 25, 2019
The company is in the process of submitting a resolution plan to the lenders and the lenders are expected to give an in-principle approval to the plan by end of July 2019. The ability of the company to continue as a going concern is predicated upon its ability to monetise its assets,secure funding from the bankers / investors, restructure its liabilities and recommence its operations.DHFL Statement
Stake Sale
- Process of identifying a strategic investor is also nearing completion
- The board will reconvene in next two weeks to look through potential proposals
Regulatory Alert
DHFL disclosed that regulator National Housing Bank has sent it a letter regarding its capital adequacy ratio slipping to 10.24 percent. NHB has given the company 21 days to response.The company said “The management does not concur with the observation of the NHB and will provide an appropriate response within the stipulated time”.
It has also appointed Asish Saraf, senior vice president of the company as its chief risk officer for a period of three years with immediate effect.