Mahindra Finance to focus on quality of assets rather than volume

Economic Times

2 days ago

Mahindra & Mahindra Group CEO and MD Anish Shah
NBFC arm of Mahindra & Mahindra would continue focus on asset quality while expanding business, a top official of the group said.
"We are very bullish about this segment... we plan to expand (business of Mahindra Finance). We have taken time to get to a much better asset quality, get to a much stronger set of controls, and we want to be one of the leaders across the banking system," Mahindra & Mahindra Group CEO and MD Anish Shah told PTI in an interaction.
Mahindra Finance would continue its forward march and do more in terms of diversification, he said. "We started with quality. We have got to that place, but it will always be the quality of assets ahead of everything else (for business growth)," he said. Talking about restructuring undertaken by the NBFC, Shah said there has been a lot of effort over the last three years. "We are in the final stages of doing that. As that happens, that's going to strengthen our business even further.
"What has also impacted the business is the fact that you had volatility in gross NPAs, and as we look back over time, some of it is driven by counting on changes, and potentially changes in how gross NPAs are calculated as well." The team has done a phenomenal job in changing the risk profile of the business and greatly leveraged technology and data analytics in a big way, he said. Therefore, Mahindra Finance is still a leading player in rural and semi-urban areas despite all the competition that's coming there from everyone, including banks, he said. Most of the big corporates are already into the NBFC space and the newest one is Jio Financial Services Ltd promoted by Reliance Group.
For the June quarter, Mahindra Finance reported a 6 per cent increase in consolidated net profit to Rs 529 crore as compared to Rs 513 crore a year ago. Its total income climbed 18 per cent to Rs 4,438 crore during the quarter, and the core net interest income increased a similar quantum to Rs 2,285 crore. The net interest margin widened to 6.7 per cent from 6.6 per cent a year ago. Established on September 4, 1998, Mahindra Finance holds a leadership position in Mahindra Tractors and Auto Financing in India, as well as among non-banking financiers for Maruti and Hyundai cars.
With a loan book size of Rs 82,770 crore and over 9 million cumulative customer contracts as of FY23, its operations are spread across 34 states/union territories through 1,386 branches/offices, as per the company's website.