Mahindra Finance Q2 net profit surges 55% to Rs 882 crore on volumes, lower credit cost - The

The company is targeting a return on assets of 2.2%-2.5% by FY31, compared with 2.2% in the September quarter.Disbursements rose 22% to Rs 16,499 crore, led by growth in SME and mortgage lending, Raul Rebello, MD & CEO, said speaking at an analyst call.He said that the effort to diversify outside passenger and commercial vehicle finance has yielded results with 20% of consolidated lending AUM being non-wheel business and 80% from the wheel business.M&M Finance is targeting a return on assets of 2.2%-2.5% by FY31, compared with 2.2% reported in the September quarter.

Rebello said that the liquidity buffer is at an all-time high and may not be raised further even if it is not dipped into.Business assets under management grew 15% year on year to Rs 1.47 lakh crore. Non-vehicle finance disbursements, including SME loans, personal loans and housing finance, increased 52%.Passenger vehicle disbursements increased 28% to Rs 6,826 crore, while financing for pre-owned vehicles grew 15% to Rs 2,834 crore.

Commercial vehicle and construction equipment disbursements rose 16% to Rs 2,657 crore, and tractor financing increased 13% to Rs 1,979 crore.Asset quality improved from a year earlier, with gross Stage 3 assets declining to 3.4% from 3.9%. Stage 2 assets fell to 4.7% from 5.8%, while collection efficiency improved to 97% from 96%. The provision coverage ratio on Stage 3 assets stood at 56.6%. Pre-provisioning operating profit grew 20% to Rs 1,791 crore.

Provisions and write-offs declined 16% to Rs 630 crore from Rs 751 crore.The lender’s capital adequacy ratio stood at 18%, including Tier-I capital of 16.2%, at the end of September. Its liquidity buffer was more than Rs 16,150 crore.