Mumbai: Non-banking lender Indiabulls Financial Services expects to maintain a spread of 3.5% in FY11, despite tight liquidity conditions, a top official said.
The lender, which borrowed funds at 8.7% during the quarter, lent at 12-12.25% through a blend of home loans, loans against property, and commercial vehicle loans.
“We have already raised our lending rate by 75 basis points in this quarter and expect to raise by another 50 basis points in quarter four,” Gagan Banga, managing director, Indiabulls Financial Services, told Reuters over telephone.
Banga expects another 30 basis point increase in borrowing cost in Jan-Mar. So, for a 100-basis point rise in borrowing rates, the company plans to raise prime lending rates by 125 basis points to offset the impact on its portfolio of fixed loans.
Earlier in the day, the company reported a net profit of Rs203 crore for Oct-Dec compared with Rs64 crore, a year ago.
The figure includes a one-time gain of Rs213.5 million from the sale of 26% stake in Indian Commodity Exchange (ICEX).
During the quarter, the company made a one-time provision of Rs331.9 million towards 0.25% on standard assets as per the Reserve Bank of India’s new guidelines.
Reacting to the earnings, shares of the company rose as much as 4.8%. At 2:58 p.m., the stock was at up 3.17% at Rs170.70, in a choppy Mumbai market.
Its net interest income rose around 15% on quarter to Rs353 crore.
Net non-performing assets as on 31 Dec stood at 0.53%. Banga expects to maintain a net NPA of 0.4-0.5% in FY11.
In order to avoid asset liability mismatch, the company during the quarter reduced dependence on short-term borrowings such as commercial paper to below 15% of the total borrowings.
As on 31 December, the non-banking lender’s outstanding loans stood at Rs17069 crore.
The non-banking lender expects to maintain a net loan book growth of Rs8000 crore in FY12, Banga said.