Edelweiss reports net loss of ₹2,281.5 crore in Q4 on higher impairments | Mint
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Business News/ Industry / Banking/  Edelweiss reports net loss of 2,281.5 crore in Q4 on higher impairments
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Edelweiss reports net loss of ₹2,281.5 crore in Q4 on higher impairments

Edelweiss’ total income declined 35.3% y-o-y to ₹1,965.8 crore in the March quarter
  • Edelweiss has assessed covid-19 impact on liquidity at ₹4,000 crore in the first six months of FY21
  • The company’s total impairments stood ₹2,549 crore in Q4 FY20Premium
    The company’s total impairments stood 2,549 crore in Q4 FY20

    MUMBAI : Edelweiss Financial Services Ltd on Saturday reported a consolidated net loss of 2,281.5 crore in the three months to March 2020, owing to a jump in impairments recorded in the quarter.

    The company’s total impairments stood 2,549 crore in Q4 FY20 based on revisions in the Expected Credit Loss (ECL) model and impact of covid-19. The total impairments were at 185.11 crore in the same period last year and at 434.31 crore in the December quarter of FY20.

    “The impact of the covid-19 pandemic on group’s results, including credit quality and provisions, remains uncertain and dependent on the current and further spread of covid-19, steps taken by the government and the Reserve Bank of India (RBI) to mitigate the economic impact and also the time it takes for economic activities to resume and reach the normal levels," Edelweiss said in a regulatory filing late on Saturday evening.

    Edelweiss’ total income declined 35.3% on a year-on-year (y-o-y) basis to 1,965.8 crore in the March quarter.

    The company added that based on the foregoing and necessary stress tests considering various scenarios, management believes that the group will be able to pay its obligations as and when these become due in the foreseeable future.

    “The group would continue to focus on maintaining adequate capital and ensuring liquidity during current period and for the period going forward," it said.

    The company’s credit business is comprised of three key subsidiaries, ECL Finance Ltd., Edelweiss Housing Finance Ltd. (EHFL) and Edelweiss Retail Finance Ltd. (ERFL). While ECL Finance reported a loss of 1,414 crore in FY20, EHFL and ERFL posted a profit after tax of 2 and 1 crore, respectively.

    Edelweiss said in its investor presentation that it has assessed covid-19 impact on liquidity at 4,000 crore in the first six months of FY21. It pointed out that this is being mitigated by 1,000 crore in long-term repo operation (LTRO) funds; 1,000 crore in bank lines under the partial credit guarantee (PCG) scheme; 1,000 core from additional asset sales and 1,000 crore drawn from its reserves.

    The company said that it has recently finalised a sell-down transaction of 4,000 crore with two global investors for its wholesale loans and plans to sell another 3,000 crore of such loans in FY21.

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    ABOUT THE AUTHOR
    Shayan Ghosh
    Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
    Catch all the Industry News, Banking News and Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates.
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    Published: 05 Jul 2020, 10:53 AM IST
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