L&T Finance Holdings posted a consolidated net profit of ₹595 crore in Q2 FY24, a growth of 46 per cent year-on-year, on the back of 32 per cent rise in retail disbursements at a record high of ₹13,499 crore.

The profit was declared even as the RBI, on Friday, imposed a penalty of ₹2.5 crore on L&T Finance for violation of certain norms in FY21 and FY22. The company did not disclose the gradation of risk and rationale for charging different interest rates to different retail borrowers, failed to notify the increase in the penal interest rate, and did not give notice of change in loan terms and conditions when it charged higher interest than communicated at the time of sanction, the central bank said.

Disbursements for the quarter were led by rural business finance at ₹5,740 crore, followed by urban finance at ₹4,859 crore. Farmer finance disbursals were lower than the previous quarter at ₹1,534 crore and SME finance was ₹872 crore.

“After having achieved most of our Lakshya 2026 goals, we have continued the trajectory of metamorphosizing into a retail finance company,” said MD and CEO Dinanath Dubhashi, adding that this has been achieved by strongly growing the retail asset book on one side and ensuring a sharp reduction in the wholesale book on the other, while maintaining best-in-class asset quality.

Retail loans were up 33 per cent y-o-y at ₹69,417 crore, accounting for 88 per cent of total loans. The wholesale book fell 76 per cent to ₹9,318 crore.

Retail Net interest margin (NIM) and fees were at 12.16 per cent for Q2, up 84 bps on year. Overall, NIM was at 8.62 per cent, compared to 8.06 per cent a quarter ago and 6.90 per cent a year ago.

Gross stage 3 assets ratio improved to 3.27 per cent from 4.04 per cent a quarter ago and 4.02 per cent a year ago. Net stage 3 assets ratio was 0.82 per cent, also better than 1.19 per cent in the previous quarter and 1.85 per cent in the previous year.