DHFL Q4 pre-tax loss rises to ~10K cr on fair value changes

Mortgage lender Dewan Housing Finance (DHFL) reported a pre-tax loss of ~10,296.91 crore in the fourth quarter of the last financial year (Q4FY20), as against a pre-tax loss of ~2,907.56 crore in Q4FY19. This was on account of a ~12,403.27-crore net loss on fair value changes. The lender reported a net loss of ~7,634.89 crore in Q4FY20, compared to a net loss of ~2,223.41 crore in Q4FY19.

By opting for a lower tax regime, the mortgage lender netted a sum of ~4,609.85 crore on account of deferred tax for FY20. It witnessed a serious drop in its loan assets, with housing and other loans at the end of the March quarter at ~66,202.68 crore, as against ~97, 978.12 crore a year ago.

The lender said around 35 per cent of its loan portfolio (by value) had availed of the moratorium facility extended by the Reserve Bank of India.

The recovery from the moratorium accounts is forthcoming with Unlock 1.0 and commencement of field visits, it said, adding, the recovery will further improve in moratorium accounts during Q1FY21.

According to the auditor’s report, DHFL incurred loss aggregating ~13,575.15 crore in FY20, thus eroding the net worth of the company substantially. “... the company’s ability to remain as a 'going concern' depends on the outcome of the ongoing corporate insolvency resolution process," the report said.

In November 2019, DHFL became the first financial services company to be admitted into the insolvency process. The mortgage lender had received expressions of interest from 24 entities; some of them wanted to bid for the whole business, while a few others sought to bid for the company in parts. The committee of creditors has extended the deadline for submission of bids until July 24 due to the Covid-19 pandemic. In the notes to accounts, the management said ~3,018.68 crore has not been reconciled while analysing the total assets, as it could not be mapped to any security against which this amount was disbursed. Hence the management decided to treat the amount as loss assets according to the asset classification norms. This has been fully provided for by the mortgage lender.