Diversified financial services player Edelweiss Group sees assets & wealth management and insurance businesses continuing to drive growth through the reminder of the fiscal as it sees credit demand to remain muted till the end of the year.

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The company returned to profit in the September quarter with a consolidated net income of Rs 57.3 crore as against a net loss of Rs 48.5 crore a year ago.

It turned around despite revenue plunging 18.1 per cent to Rs 1,823 crore during the reporting quarter when it was Rs 2,223 crore, the company said in the earnings release late Thursday.

Rashesh Shah, chairman of Edelweiss Group, told PTI on Friday that had it not been for the Rs 60-crore loss from the insurance verticals (Rs 30 crore each from each insurance business) net income would have been Rs 113 crore.

"But I am very happy with the insurance performance as they're growing very robustly. As we grow more it will incur more losses, which is typically how insurance works -- the more and faster we grow the more underwriting losses we make in the initial years. We are still three years away from break-even when it comes to insurance," he added.

Of four business segments, asset management, wealth management, insurance and credit, the first three are growing well; credit which saw Covid-19 impact has also turned a corner but still has to wait for till about April next, Shah told PTI on Friday.

He said the demerger of Edelweiss Wealth Management is on track for listing in the December 2022 quarter. "We've already demerged asset management business. This value creation is a three-way process -- first hive off and then demerge, and finally get it listed. We already have received the NCLT approvals for all this."

The performance this quarter, he noted, has been strong across all businesses and the positive trend will continue hereon.

"We returned to profitability in our NBFC business and are moving towards normalisation in retail credit, with about 96 per cent collection efficiency and a scale-up in lending," Shah said, adding credit demand is still a far cry and he doesn't see it picking up this fiscal.

Shah said as the group has been winding down the wholesale credit book, this has led to improved asset quality in the two NBFC verticals with gross NPAs improving to 2.7 per cent in the reporting quarter from around 3.3 per cent a year ago and also the net NPAs which fell to 2.2 per cent from around 2.7 per cent.

Strong performance across businesses and positive trend will continue, he said.

As of now, the recovery has been led by the asset management and wealth management and brokerage businesses and they will continue to drive growth and profitability this fiscal, Shah explained.

Overall or customer assets have grown 70 per cent each in last two years and customer base has grown to over 5 million and of them 1.8 million have been onboarded during the last year itself.

Credit business, the NBFC arm has returned to profitability on better asset quality and higher disbursements, which has been gradually scaling up and collection efficiency is back to normalcy, he said.

"We've been bringing down the wholesale book, brought it down by 33 per cent or by around Rs 8,000 crore in the past two years and further 50 per cent reduction expected in the next two years," Shah said.

Insurance business growth has been good with both life and general insurance businesses exceeding industry growth, yet both these businesses are in investment phase and "we will continue to invest to build scale in them. We have been pumping in Rs 250 crore into these verticals annually so far", he added.

He said the company has quarterly hiring plans of 600 each for every year but could get only around 300 in Q2 and no hiring in Q1 due to the lockdown. "We expect to get enough talent by March when we expect to add around 2,500".

On the brokerage business which has been doing well for everyone, he said the vertical which is part of the asset and wealth management arm made Rs 90 crore profit of which his company's share is Rs 35 crore as Edelweiss owns only 40 per cent in the vertical.