Credit and finance for MSMEs: Non-banking financial company Fusion MicroFinance, which lends micro credit to women entrepreneurs in rural and semi-urban areas, has posted a strong 30X growth in profit after tax (PAT) for the second quarter of the current fiscal from the year-ago period. According to an exchange filing, the company’s PAT increased from Rs 3.21 crore in Q2 FY22 and Rs 75.1 crore in Q1 FY23 to Rs 95 crore in Q2 FY23, delivering the highest quarterly PAT so far.
The increase came on the back of overall business improvement with assets under management (AUM) growing 54.46 per cent YoY from Rs 5,209 crore in Q2 last fiscal to Rs 8,047 crore in the last quarter of the current financial year. Disbursements also jumped 27.42 per cent to Rs 2,051 crore while the company’s net non-performing assets (NPA) stood at 1.12 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. Provisions represent the amount set aside as assets by the company to pay for anticipated losses in future.
Fusion MicroFinance managing director and CEO Devesh Sachdev wasn’t immediately available for comments.
In a statement, Sachdev said, “These positive results are a testament to our well-executed diversification strategy, maintaining adequate capital reserves, consistently managing a prudent balance of risk and growth, efficient liability management and a robust touch-and-tech model for ensuring operational excellence. These strong foundations combined with our deep understanding of the sector have helped us grow at a CAGR of 37 per cent in the last three years.”
The company reported 69.34 per cent growth in total income from Rs 267 crore in Q2 last fiscal to Rs 452 crore in Q2 current fiscal while write-offs stood at Rs 20.2 crore. Write-offs primarily are accounting expenses reported for unreceived payments or losses on assets. In terms of borrower base, Fusion MicroFinance had 32 lakh borrowers across 1,031 branches in 19 states.
The growth comes amid overall improvement in the NBFC-MFI segment in India which is likely to see a 30 per cent YoY growth in their loan book in FY23 on the back of a resurgence in demand for micro loans, especially from Tier-III cities, according to credit rating company CareEdge. The gross loan portfolio of NBFC-MFIs in the current fiscal is likely to hit the Rs 81,215 crore mark vis-a-vis Rs 61,341 crore in FY22 which saw 17 per cent YoY growth.