Microlending: NBFC microfinance institution (MFI) Fusion Micro Finance has reported profit after tax of Rs 125.69 crore in the second quarter of the current financial year, up by 32.22 per cent from Rs 95.06 crore during Q2 FY23. The company’s asset under management (AUM) jumped 24.60 per cent from Rs 8,047.18 crore during the second quarter last fiscal to Rs 10,026.43 crore in Q2 this fiscal while loan disbursements scaled by 14.22 per cent to Rs 2,343.77 crore.
Announcing its Q2 results on Monday, the company reported its gross NPAs (non-performing assets) at 2.68 per cent amounting to Rs 241.10 crore while net NPAs reduced to 0.65 per cent. The total Expected Credit Loss (ECL) was Rs 300.24 crore (including management overlay of Rs 61.48 crore) while write-offs were Rs 103.42 crore. ECL indicates losses a company is likely to see on loans given irrespective of whether the borrower has actually defaulted or not.
Devesh Sachdev, Managing Director and CEO, Fusion Micro Finance said, “In this quarter, we achieved two very significant milestones of crossing Rs 10,000 crore AUM and a rating upgrade to ‘CRISIL A+/Stable’. This is the second upgrade in less than 11 months. We added around 2.4 lakh new clients in H1, YOY growth of 17.69 per cent.”
Also read: NBFC-MFIs to continue see double-digit loan growth in FY24: CareEdge report
“We are navigating the elevated cost of funds environment very well with Marginal Cost of Borrowing at 10.55 per cent which is the lowest in the last four quarters. Our key strategic focus remains delivering long-term sustainable growth,” said Sachdev.
The number of borrowers increased to 36.9 lakh for Fusion Micro Finance during Q2 while it added 61 branches, increasing the total branch network to 1,164. The total income during the quarter increased by 26.29 per cent to Rs 571.26 crore from Rs 452.33 crore during the year-ago period.
Founded in 2010, Fusion Micro Finance caters to the underserved and unserved women entrepreneurs in rural areas.
According to credit rating company CareEdge, the favourable macroeconomic climate and renewed demand, which has led to a surge in disbursements over the past few quarters is expected to continue with the portfolio of NBFC-MFIs likely to grow at 28 per cent year-on-year in the current financial year.
Also read: Microfinance gross loan portfolio jumps 18% in FY23; write-offs up by 7.7%: Report
NBFC-MFIs had surpassed banks in the overall microfinancing landscape, constituting approximately 40 per cent of the total outstanding microfinance loans as of March 31, 2023, compared to 34 per cent for banks.
Meanwhile, the gross loan portfolio (GLP) or portfolio outstanding of the microfinance sector grew 17.9 per cent YoY as of March 2023 to Rs 3.37 lakh crore from Rs 2.86 lakh crore as of March 20222, according to a report by credit bureau Crif High Mark earlier this year.