India non-bank lender IIFL Finance may see a drop in annual earnings, Fitch says

IIFL Finance

24/02/2025 08:52

Feb 24 (Reuters) - Indian non-bank lender IIFL Finance
 IIFL.NS  will likely see its annual earnings fall from a year
earlier due to reduced net interest margins and higher credit
costs, Fitch Ratings said on Monday. 
    Earlier this month, IIFL Finance reported an 8% fall in loan
assets under management to 714.10 billion rupees ($8.24 billion)
for the first nine months of the fiscal year that ends in March.
    The company reported a loss of 144.6 million rupees, not
factoring in taxes and a one-time gain, in the nine-month
period, against a profit of 5.58 billion rupees a year ago. 
    Nirmal Jain, managing director at IIFL, flagged a
challenging quarter on asset quality stress in its microfinance
segment, adding the gold loan segment faced pressure as the
company struggled to regain customers. 
    In March 2024, the Indian central bank ordered IIFL Finance
to stop disbursing gold loans, citing "material supervisory
concerns". It lifted that ban in September. 
    IIFL has also faced other challenges, including a search by
tax authorities at three of its companies. 
    Fitch Ratings said weak loan quality and narrower interest
spreads will impact the company's near-term performance, which
could also pose downside risks to its ratings. 
    Fitch's current rating on IIFL Finance is 'B+' with a stable
outlook. Its assessment of the company's performance is based on
the nine-month earnings.  
    IIFL's performance mirrors weakness in microfinance and
other unsecured segments across companies, while credit costs
remain high, the rating agency said.
    


($1 = 86.6880 Indian rupees)

 (Reporting by Manvi Pant in Bengaluru; Editing by Mrigank
Dhaniwala)
 ((Manvi.Pant@thomsonreuters.com; +918447554364;))