Power Finance Corporation posts 2% net profit growth in Q2, declares ₹3.65 interim dividend

Power Finance Corporation (PFC) has announced its financial results for the quarter ending September 30, 2023. The company reported a net profit of ₹4,462 crore, which represents a 2% year-on-year growth from ₹4,370 crore in the same quarter last year. While the profit growth was subdued, PFC's Net Interest Income (NII), a key indicator of its core lending operations, surged by a significant 20% to ₹5,290 crore from ₹4,407 crore in the prior year's quarter.

The company's asset quality also showed marginal improvement. The Gross Credit Impaired Assets Ratio decreased to 1.87% at the end of the September quarter, down from 1.92% in June. Similarly, the Net Credit Impaired Assets Ratio improved slightly to 0.37% from 0.38%.

In a move to reward shareholders, PFC declared an interim dividend of ₹3.65 per share. The record date for this dividend has been fixed as November 26, 2023, and the dividend is expected to be credited by December 6, 2023.

Impact The market reaction was mixed, with PFC shares cooling off from their daily highs after the results. The subdued net profit growth might be a concern for some investors, but the robust NII growth and the declaration of an interim dividend are positive factors. The improvement in asset quality further supports the company's financial health. Overall, the results present a mixed bag, indicating steady operational performance but tempered profit expansion.

Impact Rating: 5/10

Definitions: Net Profit: The profit a company makes after deducting all expenses and taxes from its revenue. Net Interest Income (NII): The difference between the interest income a financial institution earns from its lending activities and the interest it pays out to its depositors or lenders. It is a primary source of revenue for banks and financial companies. Gross Credit Impaired Assets Ratio: This ratio indicates the percentage of a financial institution's total loans that are considered non-performing, meaning borrowers are significantly behind on payments or have defaulted. Net Credit Impaired Assets Ratio: This is calculated by subtracting the provisions made by the financial institution for bad loans from the gross non-performing assets. It shows the actual exposure to bad loans after accounting for potential losses. Interim Dividend: A dividend payment made by a company to its shareholders during the middle of its financial year, before the final dividend is announced.