Edelweiss Financial Services group plans to further reduce its wholesale loan portfolio, which sits on the balance sheet in the next two years, to Rs 2,900 crore by September 2024, aided by strong investor demand. Its wholesale loans book stood at Rs 8,500 crore at the end of September 2022.
The financial services group has already reduced wholesale loan assets in the last 24 months from Rs 11,900 crore in September to Rs 8,500 crore at the end of September 2022.
In a filing with BSE, the company said improved macro environment and sell-down capabilities were driving faster book reduction. Housing demand remains at elevated levels and is also facilitating sale transactions.
The wholesale loan pool is reduced through a combination of resolutions and recoveries and active sell-down of the portfolio into AIF structures. The total inflows from sales, resolution etc., stood at Rs 1,700 crore in the first half ended September 2022 (H1Fy23). It expects inflows of over Rs 2,000 crore in (H2 FY23).
Edelweiss has yet to exit corporate and wholesale credit space but has tweaked its business model to do this activity through the asset-light Alternative Asset Management route. This is helping to release equity capital in the credit business subsidiary ECL Finance. Assets Under the management of this unit grew to Rs 40,000 crore in September 2022 from Rs 30,200 crore a year ago.
ECL Finance also focuses on an asset-light model with steady disbursals through a lender partnership. It is working on a co-lending platform and scaling up its SME credit portfolio. Currently, it has tie-ups with public sector lender Central Bank of India and private sector lender IDFC first bank. It is in advanced conversations with two other leading banks, Edelweiss said.
ECL Finance’s credit book shrunk from Rs 13,705 crore in September 2021 to Rs 10,761 crore at the end of September 2022. Its capital adequacy stood at 34.1 per cent at the end of Q2FY23.
Another lending arm, Housing Finance Company’s credit assets declined from Rs 3,755 crore in September 2021 to Rs 3,251 crore at the end of September 2021. Its capital adequacy ratio was 35.8 per cent at the end of September 2022.
