M&M Finance reports 10% drop in Q4 FY24 net profit
What's the story
Mahindra & Mahindra Financial Services (M&M Finance), a prominent non-banking financial company, has reported a 10% year-on-year (YoY) decrease in its net profit for the fourth quarter of FY24.
The net profit fell to ₹619 crore, compared to ₹684 crore during the same period last year.
The company attributes this decline to increased expenses and a one-time provision of ₹136 crore due to fraud.
Financial performance
Expenses surge, disbursements increase
M&M Finance's expenses saw a significant 36% YoY rise, reaching ₹2,874.56 crore in Q4 FY24 from ₹2,112.94 crore, in the same quarter of FY23.
Despite this financial setback, the company reported an 11% increase in disbursements to ₹15,292 crore over ₹13,778 crore in Q4 FY23.
The overall disbursements for FY24 showed a robust growth of 13% YoY to ₹56,208 crore.
Business growth
M&M Finance expands loan book, strengthens position in key sectors
M&M Finance reported a substantial 24% YoY expansion of its loan book to ₹1,02,597 crore.
"In FY24, the company strengthened its position in the financing of passenger vehicles, pre-owned vehicles, and tractors," stated M&M Finance.
The firm also experienced growth in non-vehicle sectors such as SMEs, digital finance, leasing, and other lending and non-lending financial solutions segments.
Fraud incident
Financial fraud, strengthened controls
On April 25, M&M Finance disclosed a financial fraud of ₹150 crore, related to its retail vehicle loans at the Aizawl branch in Mizoram.
"These loans had an outstanding net recoverable balance of ₹135.9 crore as of March 31, 2024, which has been fully provided," the company clarified.
In response to this incident, the company appointed a law firm and an accounting firm to conduct an investigation into the suspected irregularities.
Revenue growth
M&M Finance reports increased total income in Q4 FY24
During Q4 FY24, M&M Finance reported a total income of ₹3,706 crore, marking an increase of 21% over ₹3,057 crore during the same period last year.
The net interest income rose by 14% to ₹1,971 crore during the fourth quarter of FY24.
For FY24, the profit after tax declined by 11% to ₹1,760 crore while total income rose by 23% to ₹13,562 crore.