L&T Finance Holding on Friday reported 68.87 per cent year-on-year (YoY) decline in net profit at Rs 174 crore for the second quarter ended September 30, 2019, following one-time adjustment due to the deferred tax assets (DTA) after cut in corporate tax.
"The company had posted a net profit of Rs 559.12 crore in the same quarter last year," L&T Finance Holding (LTFH) said in a filing to the Bombay Stock Exchange.
During the September quarter, the government announced the reduction of corporate tax rate (CTR) from 34.94 per cent to 25.17 per cent. Under the new guidelines, corporates that have taken higher provisions and created DTA at 34.94 per cent need to revise the tax rate to 25.17 per cent, leading to a one-time P&L (profit & loss) charge of 9.77 per cent, the company said.
"Following this, LTFH is opting for lower CTR of 25.17 per cent leading to lower tax liability from FY20 onwards. As a part of its robust risk management framework, over the last 3 years, LTFH has implemented accelerated provisions to enhance PCR (provision coverage ratio).
"Consequently, Q2 FY20 results reflect one time impact of Rs 473 crore due to reversal of DTA as on April 1, 2019," it added.
LTFH's total revenue increased to Rs 3,711.85 crore as against Rs 3,302.35 crore in the corresponding quarter last year.
Commenting on Q2 earnings, L&T Finance, Managing Director & CEO, Dinanath Dubhashi said, "We remain a partner of choice for financiers and continue to diversify our liability mix through reputed domestic and global institutions. Our continued investment in businesses where we have a clear 'Right to Win', has been the bedrock of our strategy, and we remain committed to this plan."
The company's lending book grew by 10 per cent to Rs 1,00,258 crore as compared to Rs 91,201 crore in the year-ago period.
While Average Assets under Management (AAUM) decreased 6 per cent from Rs 73,754 crore in Q2FY19 to Rs 69,213 crore in Q2FY20, Assets under Service (AUS) increased to Rs 26,309 crore in Q2FY20 from Rs 21,065 crore in Q2FY19, registering a growth of 25 per cent.
Ahead of Q2 results, shares of L&T Finance Holding closed 0.23 per cent lower at Rs 85.35 apiece on the Bombay Stock Exchange.
Edited by Chitranjan Kumar with PTI inputs
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