Indian billionaire Adar Poonawalla's lender posts fivefold jump in quarterly profit

Poonawalla Fincorp Ltd., the non-bank lender controlled by Indian billionaire Adar Poonawalla, posted a fivefold increase in quarterly profit as its loan book expanded, margins widened and bad loans fell.

Consolidated profit after tax rose to Rs 375 crore, or about $38.8 million, in the three months to Sept. 30, from Rs 74 crore, about $7.7 million, a year earlier, the company said on Oct. 12. Profit rose 22% from Rs 308 crore, or about $31.8 million, in the previous quarter.

Net interest income, including fees and other income, climbed 76% from a year earlier to Rs 1,589 crore, or about $164 million. Operating profit more than doubled to Rs 877 crore, about $90.7 million, from Rs 387 crore, about $40 million.

A bigger, cleaner loan book

Assets under management reached Rs 74,008 crore, or about $7.65 billion, at the end of September. The net interest margin widened to 9.26% from 9.10% in the June quarter, and return on assets rose to 2.18% from 1.98%.

Asset quality improved. Gross non-performing assets fell to 1.20% of loans from 1.37% three months earlier, and net non-performing assets dropped to 0.61% from 0.70%. Credit costs were Rs 376 crore, about $38.9 million, and fell to 2.19% of average assets under management from 2.40%.

Operating expenses rose 37% from a year earlier to Rs 712 crore, about $73.6 million, as the company expanded. The lender's capital adequacy ratio stood at 18.68%, and it held a liquidity buffer of Rs 6,526 crore, about $675 million. Its secured and unsecured loans were split 52 to 48.

Managing Director and Chief Executive Officer Arvind Kapil said growth in assets, margins and fee income, along with better asset quality, had driven the improvement in profitability and returns. The company said it added 42 artificial intelligence projects during the quarter, taking its total to 143, of which 84 are in use.

The Poonawalla bet on lending

Adar Poonawalla, who also runs the Serum Institute of India, the world's largest vaccine maker by volume, took control of the lender in 2021, when his Rising Sun Holdings invested in Magma Fincorp and renamed it Poonawalla Fincorp. He is the chairman of the company.

The lender is part of the Cyrus Poonawalla Group, built by his father, Cyrus Poonawalla, who founded the Serum Institute in 1966. It is registered with the Reserve Bank of India as a systemically important, non-deposit-taking non-bank finance company and lends against property and gold, and offers personal, education, consumer, business, commercial vehicle and used car loans.

Amounts in rupees were converted at 96.71 rupees per dollar.