Process enhancements to help recover from fraud setback

Company
07 May 2024
5 Min read 
  • Mahindra & Mahindra Financials 4QFY24 PAT declined ~10% YoY to INR6.2b 
  •  Adjusted for provisions on Mizoram fraud, PAT would have been INR7.2b 
  •  FY24 PAT fell 11% YoY to INR17.6b.
  •  NII stood at INR18.1b, up ~13% YoY 
  •  Other income rose ~30% YoY to ~INR1.6b 
  •  Credit costs at ~INR3.4b included provisions of ~INR1.36b related to fraud in Mizoram.
  •  MMFS has started accelerating process improvements, including heightened due-diligence for customer onboarding and centralized verification of customers.
  •  MMFS expects to use levers on product mix and fee income to deliver a ~25bp YoY improvement in NIM 
  •  Benefits from the ECL provision release and a decline in write-offs will also result in improvement in credit costs.
  •  MMFS does not foresee the need to raise equity capital in FY24 
  •  However, it might look to raise equity capital in FY25.
  •  The fraud was detected in Aizawl branch, Mizoram 
  •  Fraud was identified across 2,887 accounts and ~INR1.37b of provisions have been made 
  •  MMFS expects recoveries after law enforcement agencies complete their investigation.
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