IIFL Finance expects 15% AUM loan growth in FY22

The partial lockdowns imposed by few states due to Covid-19 may have some impact on the business, but Rajak claimed that nothing was visible on-ground yet. Representational Image

By Ankur Mishra

IIFL Finance expects loan assets under management (AUM) to grow by 15% in the financial year 2022 (FY22), CFO Rajesh Rajak told FE. The lender is finding comfort from loan growth due to improved collections in the recent months. Without specifying details, Rajak said collection efficiency had sustained the trend after good show till December 2020. The collection efficiency had improved to 98-100% in home loans, 85-90% in business loans, more than 100% in gold loans and the micro-finance segment till December 2020.

The partial lockdowns imposed by few states due to Covid-19 may have some impact on the business, but Rajak claimed that nothing was visible on-ground yet. “If there is an extreme situation, we will get affected like everyone else but the whole idea will be to get impacted lesser than the industry,” Rajak said.

Last week, rating agencies Crisil had revised its rating on company’s arm IIFL Home Finance to ‘stable’ from ‘negative’. “The current outlook back to ‘stable’ revision factors in the continuous improvement in collection efficiency (excluding foreclosures) resulting in the uptick in asset quality metrics being lower than previous expectations despite weak macroeconomic environment,” Crisil said. The outlook revision also factors in the improvement in fund raising of the company, the rating agency said. IIFL Finance had raised `670 crore from non-convertible debentures (NCDs) in March 2020. Earlier in March, another rating firm Fitch had affirmed IIFL Finance’s long-term issuer default rating (IDR) at ‘B+’ and removed it from rating watch negative (RWN). This reflects Fitch’s view of easing downside risk to the company’s credit profile due to less adverse economic and funding conditions, which we expect to be broadly sustained in the coming year, the rating firm said.

Analysts at Kotak Institutional Equities said the fourth quarter (Q4FY21) was a strong quarter for non-banking financial companies (NBFCs), with disbursements picking up sequentially across the board, driven by moratorium exit, pent-up and seasonally strong demand.

“While disbursements were strong, loan growth may be muted. Weak new business momentum in the first half of FY21 will likely drag loan growth for the next few quarters and bottom out sometime in FY22,” the Kotak Institutional Equities report said on Tuesday.