Magma net profit rises 38%

Higher revenues, improvement in spreads drive earnings

Magma Fincorp, on Thursday said its net profit for the quarter ended June 30 increased by 38 per cent to Rs 45.4 crore. Higher revenues, loan growth and improvement in spreads aided earnings.Revenues grew 45 per cent from the previous year to Rs 510 crore.

Spreads increased by 116 basis points during the quarter. The loan book was Rs 16,274 crore at the end of June, up 28 per cent from a year ago.

“We have again exhibited resilience in our performance despite the industry going through a very difficult phase. Our performance highlights were the growth in revenue and profit after tax, owing to an increase in spreads and effective management of our diversified portfolio,” Sanjay Chamria, vice-chairman and managing director, said in his post-earnings comments.

Magma said it had faced a tough quarter in terms of collections, as customers were suffering from erratic cash flows and large infrastructure projects had virtually stalled across zones. The company made provisions and write-offs of Rs 36.09 crore in the first quarter of this financial year.

“Our new businesses of general insurance, gold loans and housing finance have all been launched in the last one year and they need investment of time, efforts and money. However, these will stabilise in the coming years and will further contribute to both top line and bottom line,” Chamria said.

He was confident that as the economy revives the company will be able to grow in terms of revenues and improve its asset quality further.

Magma is one of the 26 companies that have applied for a new banking licence.