Lionheart Holdings Q3 FY2023 earnings call

• RBI Inspection & NPA Divergence: Divergence of INR 259 crore in NPA for FY 2021 due to interpretation issues. Corrective steps taken. - ECL Impact: Expected total impact of ~INR 200 crore from ECL implementation, spread over 5 years, minimal impact on ROA. - Financial Performance: Credit growth 12%, deposits below INR 50k crore, net interest margin ~3.97%, ROA 1.51%, cost to income ratio 38%, PCR coverage improved to 67%. - Operational Highlights: Opened 25 branches, 500th branch in Tamil Nadu, technical integration with TIN2.0 portal for tax payments.

Financial performance: Deposits were just below INR 50,000 crore. Credit grew by 12% to INR 43,000 crore (12% growth from 31 Dec 2021 to 31 Dec 2022). Overall business grew by 9%. CASA recorded 5% growth. Gross profit for Q3 showed 3% growth QoQ. Net profit for Q3 FY '23 was INR 218 crore, up 11% from INR 196 crore in Q3 FY '22. ROA for 9 months stood at 1.51%. Net interest margin for 9 months was 3.97%. Gross NPA was 4.62% and net NPA was 2.67% as of 31 Dec 2022. SpiceJet had repaid INR 34.4 crore with current outstanding INR 65.6 crore, final installment due in June 2023. Slippage in Q3 FY '23 was INR 439 crore, with recovery and upgradation totaling INR 257 crore. Cost to income ratio for 9 months was 38%. Capital adequacy ratio was 20.47% as of 31 Dec 2022.

• Credit Growth: Originally expected 15%-18% but fell short; target for next year depends on deposit growth and investment cycle. - ROA: Expected to stay around 1.5%. - PCR: Aim to take PCR to 70% with technical write-off, 50% without. - Interest Income: INR 32 crore from gold loans expected to be recognized in Q4 FY '23 once paperwork is completed.

• RBI inspection and NPA divergence issues. - Uncertainty around ECL implementation impact. - Delayed investment cycle affecting credit growth. - Compliance and paperwork issues related to INR 32 crore interest income recognition.

Q: When you talked about 15% to 18% growth and falling short this year, what would be the target for next year and industry growth needed?

A: N. V. Kamakodi said he can answer more clearly with Q4 results, emphasizing balanced growth with deposit growth.

Q: On the INR 32 crore interest income, can we expect this to be recognized in Q4 FY '23?

A: N. V. Kamakodi said they hope to complete paperwork before Q4 and recognize the income once regulator is satisfied.

Q: On PCR coverage, what is the target and impact on credit costs?

A: Aim to take PCR to 70% with technical write-off and 50% without, with minimal impact on ROA calculations.