On Friday, retail-focused non-bank lender L&T Finance Holdings reported a 46% year-on-year rise in consolidated net income to Rs 501 crore in the March 2023 quarter, driven by faster growth in its high-yielding retail book.

The company said that full-year consolidated net income rose 52% to Rs 1,623 crore, with its retail portfolio rising to 75% of total loans from 51% a year earlier, with higher margins.

Margin expansion also surprised the back of lower funding costs, with the fund down 4 basis points for the year to 7.46%.

It was the lowest annual weighted average borrowing cost of 7.46% on record in an environment of rising interest rates, down 4 basis points from fiscal 2022, the company said in a statement.

Annual retail spending also peaked at Rs 42,065 crore for the year, driven by solid growth across all retail segments, which accelerated a 54% drop in wholesale orders to Rs 19,840 crore.

Better asset quality also helped profitability, with gross margins below 3% and net levels below 1%.

Net income from the retail book was Rs 1,384 crore, up 87% for the whole year and Rs 472 crore in the reported quarter, up 20% year-on-year.

The lower cost of capital allowed the company to post a net interest margin of 11.54% in FY23 and 11.87% in Q4.