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IIFL Finance reported significant growth in its third-quarter performance, primarily driven by a sharp rise in gold loans. Home loan assets also showed steady gains, reflecting a gradual recovery in mortgages and loans against property. The company's focus on secured lending has stabilized cash flows, improved asset quality, and reduced earnings volatility. With declining NPAs, easing credit costs, and enhanced operational leverage, IIFL Finance expects consistent growth in the coming quarters. Bank partnerships and AI-driven workflows are further supporting efficiency and profitability improvements.
IIFL Finance's third-quarter growth was largely led by a strong recovery in gold loans, while the management anticipates that momentum in home loans and loans against property will strengthen over the coming quarters, according to managing director Nirmal Jain. Advertisement
The company's home loan assets under management (AUM) grew by 5 per cent to INR 31,893 crore, while gold loan AUM surged 189 per cent to INR 43,432 crore during the December quarter. These secured segments now form the majority of the loan book, reflecting a strategic shift away from higher-risk and more volatile portfolios that had previously affected performance.
Jain noted that this portfolio rebalancing has helped stabilize cash flows and reduce earnings volatility. Asset quality improved sequentially, with gross and net non-performing assets (NPAs) declining across businesses while provision coverage remained robust. Gross NPAs moderated to 1.6 per cent from 2.4 per cent at the end of the previous year, while net NPAs eased to 0.8 per cent from 1 per cent in the comparable quarter of FY'25.
Credit costs have started easing as stress from legacy portfolios diminishes, and the management expects further normalization as the mix shifts decisively toward secured lending. Jain indicated that the most challenging part of cleaning up legacy portfolios is now behind the company, and the focus is shifting to achieving consistent growth with strong risk controls and predictable asset quality.
The improving credit profile is beginning to complement operating leverage. Over the years, IIFL Finance has built an extensive physical distribution network, and as volumes, particularly in gold loans, recover, incremental growth is expected to generate disproportionately higher profitability.
The company is also leveraging technology and artificial intelligence to enhance credit assessment, monitoring, and operations. AI-driven workflows have shortened turnaround times, reduced operating costs, and improved customer experience. Bank partnerships are emerging as a critical growth driver, with co-lending and direct assignment arrangements expanding due to clearer regulations and sustained demand for priority-sector retail assets.
Jain highlighted that with asset quality stabilizing, credit costs moderating, and operating leverage starting to take effect, IIFL Finance appears to be entering a more predictable phase of earnings growth. The company's performance in the upcoming quarters will determine if these improvements lead to sustained profitability gains.
Source PTI
FAQ
Q1. What were the key drivers of IIFL Finance's growth in the third quarter?
IIFL Finance's growth in Q3 was primarily led by a sharp recovery in gold loans, which have become the largest segment of its loan portfolio. Additionally, home loans and loans against property showed steady gains, reflecting a gradual recovery in the mortgage and secured lending markets. The company's strategic focus on secured lending has helped stabilize cash flows and mitigate risks from volatile or higher-risk unsecured segments.
Q2. How did the company's gold and home loan portfolios perform?
Gold loan assets under management (AUM) surged 189 per cent to INR 43,432 crore, demonstrating strong demand and recovery. Home loan AUM grew by 5 per cent to INR 31,893 crore, reflecting consistent borrower interest and improved mortgage activity. Together, these secured segments now form the majority of IIFL Finance's loan book, underscoring a deliberate shift from higher-risk lending toward stable, collateral-backed products.
Q3. How has asset quality evolved?
Asset quality has improved significantly. Gross NPAs declined to 1.6 per cent from 2.4 per cent in the same quarter of the previous year, while net NPAs eased to 0.8 per cent from 1 per cent. Provision coverage ratios remain strong, highlighting the company's ability to absorb potential credit losses and maintain a healthy balance sheet. Management attributes this improvement to disciplined lending practices, regular monitoring, and portfolio rebalancing.
Q4. What impact has portfolio rebalancing had on earnings and cash flow?
Rebalancing the loan book toward secured lending has stabilized cash flows and reduced earnings volatility. By moving away from riskier segments, the company has been able to maintain predictable revenue streams. This shift is expected to support sustainable growth and allow IIFL Finance to optimize its operating leverage as the volume of secured lending grows further.
Q5. How are credit costs changing?
Credit costs have started easing as stress from legacy portfolios diminishes. With secured lending now forming a larger share of the book, management expects further normalization of credit costs in the coming quarters. This reduction, combined with improved collection efficiency, is likely to enhance overall profitability and cash flow stability.
Q6. How is technology supporting operations?
IIFL Finance is leveraging artificial intelligence (AI) and technology-driven workflows to improve credit assessment, monitoring, and operational efficiency. AI-driven systems have reduced turnaround times, improved customer experience, and lowered operational costs. These initiatives also enable faster decision-making in loan approvals and enhance portfolio monitoring, reducing the risk of defaults and operational bottlenecks.
Q7. What role do bank partnerships play in growth?
Bank partnerships, including co-lending and direct assignment arrangements, are emerging as significant growth drivers. Regulatory clarity and sustained demand for priority-sector retail assets have strengthened these collaborations. Such partnerships allow IIFL Finance to expand its lending capacity, diversify sources of funds, and reach a broader customer base while sharing credit risks with partner banks.
Q8. What is the outlook for the upcoming quarters?
The company anticipates continued momentum in home loans and loans against property, alongside sustained demand for gold loans. With stabilized asset quality, declining credit costs, and the benefits of operational leverage, management expects consistent and predictable growth. The combination of technology adoption, bank partnerships, and disciplined secured lending is expected to drive higher profitability and robust performance in the near to medium term.
Q9. How does this performance position IIFL Finance strategically?
By focusing on secured lending, strengthening operational efficiency, and leveraging technology, IIFL Finance is positioning itself for sustainable growth in a competitive lending environment. The company's approach reduces risk exposure, enhances portfolio quality, and ensures long-term financial stability, making it well-prepared to capture opportunities in both gold loans and housing finance markets.
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