Muthoot Microfin Q3 Profit Surges 16x as Provisions and Costs Decline
Muthoot Microfin has reported an impressive increase in profits for the third quarter, primarily driven by reduced provisions and credit costs. This remarkable growth comes alongside improvements in margins, asset quality, and the overall loan portfolio. Here are the key highlights:
– Net Profit: Muthoot Microfin’s net profit for Q3 soared to ₹62.4 crore, a staggering 16-fold increase from ₹3.8 crore during the same period last year.
– Provisions for Bad Loans: The substantial profit increase was bolstered by a decrease in provisions for bad loans, which fell to ₹106 crore from ₹164 crore year-over-year. This reflects a tightening strategy that has effectively reduced financial risk.
– Credit Costs: The company’s credit cost for the quarter was reported at 3.3%, well below the fiscal guidance range of 4-6%.
– Asset Quality: The gross non-performing assets (NPA) ratio improved to 4.4% by the end of December, down from 4.6% in the previous quarter.
– Operating Profit: Despite the surge in profit, the pre-provisioning operating profit declined to ₹175 crore compared to ₹252 crore in the previous year.
– Net Interest Margin (NIM): Muthoot Microfin’s NIM for the quarter was recorded at 12%, reflecting an increase of 11 basis points from the preceding quarter.
– Loan Portfolio Growth: The gross loan portfolio grew by 5.4% year-on-year, reaching ₹13,079 crore.
Chairman Thomas Muthoot emphasized that the microfinance sector is emerging from a challenging period, gradually transitioning back to a sustainable growth trajectory.
In conclusion, Muthoot Microfin’s impressive Q3 results underline the effectiveness of its risk management strategies, particularly in terms of provisions and credit costs. As the microfinance sector continues its recovery, Muthoot Microfin is well-positioned for future growth, enhancing its appeal to investors and stakeholders alike.