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Five Star Business Finance forecasts 30% loan growth for FY25
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
Lakshmipathy Deenadayalan, CMD of Five Star Business Finance, expects the net interest margins (NIMs) to come down to a steady state of around 15-16% in 2-3 years.
Chennai-based Five-Star Business Finance, based in Chennai expects its loan book to grow 30% in the current financial year (FY25).
Total disbursements for January-March period grew 20% to ₹1,336 crore from ₹1,110 crore last year.
Lakshmipathy Deenadayalan, Chairman and Managing Director of the non-bank finance company (NBFC) said, “I don’t see any kind of weakness, both in loan growth as well as from collections perspective. The outlook is very strong; especially post COVID we have been giving growth of above 30% and the same growth will continue,” he added.
Deendalayan expects the net interest margins (NIMs) to come down to a steady state of around 15-16% in 2-3 years. The NIM was at 17.19% in the latest quarter versus 18.47% last year.
He pointed out that the NBFC focuses on lending to specific niche segments where traditional financial services are not readily available to customers.
Also Read | Five Star Business Finance forecasts 31-32% asset base growth in FY25
The lender has raised the Capital to Risk (Weighted) Assets Ratio (CRAR for certain users in light of the Reserve Bank of India’s (RBI’s) recent circulars.
CRAR is a measure used by banks to ensure they have enough capital to cover their risks
On loans given out for personal needs, the lender has raised the CRAR to 125% from 100%.
Also Read | RBI issues revised guidance note on operational risk management, extends it to NBFCs
In the January-March quarter, the lender’s profit after tax (PAT) increased by 40% to ₹236 crore.
The market capitalisation of Five Star Business Finance is around ₹21,651.48 crore. Its shares have gained close to 42% in the past year.
For the entire interview, watch the accompanying video
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