Credit and finance for MSMEs: Non-banking financial company Fusion Micro Finance, which lends micro credit to women entrepreneurs in rural and semi-urban areas, has reported over 17x year-on-year (YoY) growth in its profit after tax (PAT) for the financial year 2022-23. The net profit jumped from Rs 21.7 crore in FY22 to Rs 387.1 crore in FY23 – the highest since the company’s inception in 2010 — with loan disbursements growing 39 per cent YoY from Rs 6179.7 crore to Rs 8,596.1 crore during the said period.
As per its audited financial results for FY23, the company’s assets under management (AUM) grew 37 per cent from Rs 6,785.9 crore in FY22 to Rs 9,296.2 crore in FY23. Fusion Micro Finance said its borrower base also increased by 29.7 per cent to 35.3 lakh across 1086 branches in FY23 from 27.2 lakh across 934 branches in FY22.
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The total income for the company stood at Rs 1,799.9 crore in FY23, up 49 per cent from Rs 1,201.3 crore in FY22 while its cost-to-income ratio also bettered to 38.44 per cent in FY23 from 44.27 per cent in FY22. The ratio shows a company’s costs as a proportion of its income and hence helps ascertain how efficiently an organisation is operating.
“FY23 has been a milestone year for the company as we successfully got listed and have demonstrated strong performance consistently across all operational and financial metrics, said Devesh Sachdev, Managing Director and CEO, Fusion Micro Finance.
“We have achieved these results due to our focused strategy of geographical diversification, building an extensive network, investing in human capital, technology, sound risk management and building for the future.”
In terms of asset quality, the company’s gross NPA ratio of the total advances improved to 3.46 per cent in FY23 from 5.71 per cent in FY22 while the net NPA ratio also improved to 0.87 per cent from 1.64 per cent. Net NPA is essentially the amount left after deducting the doubtful and unpaid debts called provisions from the gross NPA of a company.
Also read: Microfinance industry to see 25% growth in FY24; GNPAs to improve to 3%: CareEdge
The overall microfinance sector in India is expected to continue with around a 25 per cent year-on-year (YoY) jump in AUM in FY23, driven by steady disbursement growth and an improving macroeconomic environment, according to a report by credit rating agency CareEdge in April.
The MFI sector had experienced a slowdown in growth in FY21 due to the challenges posed by the Covid-19 pandemic. However, growth rebounded in FY22, with NBFC-MFIs growing at 18 per cent Y-o-Y, supported by strong disbursements in the latter part of the fiscal year, and at 20 per cent in FY23.
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