Financial Services firm Reliance Capital (RCap) on Friday reported a 22.5 per cent rise in net profit at Rs 201 crore for the first quarter between April to June period.

The Anil Dhirubhai Ambani Group company had a net profit of Rs 164 crore in the year-ago quarter.

Among the group companies, contributing to the growth was Reliance Mutual Fund's profit before tax was Rs 108 crore for the quarter. Reliance Capital Asset Management (RCAM) managed Rs 2.43 lakh crore at the end of Q1FY16, across mutual funds, pension funds, managed accounts and offshore funds.

The fund house average assets under management (AAUM), for the quarter ended June 30, were Rs 1.45 lakh crore. 

“We saw growth from our mutual fund arm, general and life insurance subsidiaries…Construction finance and commercial vehicle will remain slow for sometime. In the housing finance, we are moving to the affordable segment (Rs 15-40 lakh loans) and aim to grow to a business of Rs 10,000 crore by March end from about Rs 6,200 crore as on June end, 2015,” said Sam Ghosh, CEO of Reliance Capital.

Net interest margins (NIMs) came down from 5.6 per cent to 5.4 per cent. Ghosh reasoned it was because the yields came down to 15 per cent from 15.3 per cent. We expect it to pick up and keep the NIM between 5.5 to 5.8 per cent.

With regard to life insurance venture, the new business premium came down marginally to Rs 301 crore with more focus on traditional products as it is “more sustainable and profitable”, while the renewal premium was Rs 451 crore for the quarter, an increase of 8 per cent.

The life insurance unit’s profit increased marginally by 2 per cent to Rs 35 crore for the quarter as the focus was more on the traditional products. “Our ULIP share came down to 13 per cent from 25 per cent last year. Once, the RBI guidelines that banks can hire corporate agents for the insurance business come through, our life insurance business will pick up with banks allowed to hire multiple partners.”

RCap plans stake sale in its insurance subsidiaries by the last quarter or early next fiscal. “This will bring down our debt-to-equity ratio, which is at 1.79:1 at present…,” Ghosh said.

Reliance General Insurance posted 22 per cent increase in net profit at Rs 30 crore for the quarter. The gross written premium rose by 10 per cent at Rs 863 crore.

RCap plans a 1:1 rights issue in the commodities exchange arm, which has a capital of Rs 100 crore.

We expect overall growth to be around 15-20 per cent in the year ahead with focus on housing finance, mutual funds and broking arms, Ghosh added.

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