Micro lenders' second quarter profit allay slowdown concerns
Bigger microfinance firms have shown steady growth and profit numbers during the second quarter.
Delhi-based Satin Creditcare Network, the country's second largest NBFC-MFI in terms of loan outstanding, has reported 17.8% rise in net profit at Rs 54 crore for the September quarter over Rs 46 crore in the year ago period even as its has seen stress in repayment in flood-hit states. Satin's gross loan portfolio grew 16% to Rs 7182 crore.
"Our guidance for annual net profit remains the same at Rs 260 crore despite challenging business environment as microfinance has not impacted by rural slowdown," said HP Singh, chairman at Satin. "Notwithstanding the challenging environment under which the NBFC industry has tread in the last quarter, we hold India’s largest NBFC-MFI customer base."
Largest MFI CreditAccess Grameen with Rs 7905 crore gross loans had last week reported 37% rise in net profit at Rs 101 crore compared with Rs 74 crore for the same period buoyed by improvement in asset quality.
Kerala-based ESAF Small Fiannce Bank, which mostly lends to micro borrowers, said its half year net profit zoomed at Rs 92.44 crore against Rs 24.07 crore in the previous year.
Gold loan NBFC Manappuram Finance has reported 82% rise in consolidated net profit at Rs 402 crore for the quarter ended September 30, 2019 over Rs 221 crore in the year ago period with assets under management rising 20.45% to Rs 15,168 crore. Its microfinance subsidiary, Asirvad Microfinance, ended the quarter with 73% higher AUM of Rs 4,724 crore.
Although floods in several states have hit lending and loan recovery operations for these firms, they managed to put up a better show overall.
"On account of floods in the states of Assam, Bihar, Orissa and Madhya Pradesh, we witnessed a marginal increase in PAR (portfolio at risk) numbers during Q2FY20 and also impacted loan disbursement. However, we are constantly working towards maintaining a quality portfolio," Satin's HP Singh said.
Satin's gross non performing assets at 3.1% at the end of September was an improvement year-on-year from 4.1% but a deterioration from 2.8% from June.
ESAF said the rise net profit is largely led by higher business volume and asset quality improvement, despite a slowdown in the market.
ICICI Securities had said in a report last month that rural slowdown is limited to certain sectors with negligible near-term impact on low-income rural households.
Rural households with less than Rs 1 lakh annual income form a major portion of MFIs’ customer-base. About half the MFI loans are being used for producing basic consumption goods and not for purchasing aspirational items like two-wheelers.