SKS Microfinance Q3 net dips 38% to Rs 34 cr

SKS Microfinance today reported a 38.41 per cent decline in net profit at Rs 34.15 crore for the October-December period owing to higher provisioning and bad loan write-offs during this quarter.

SKS, the only-listed microfinance company in the country, had a net profit of Rs 55.45 crore in the December quarter of the previous fiscal (2009-10).

The total provisioning and write-offs for Q3 FY11 was Rs 100.75 crore, which includes additional provisioning of Rs 26.98 crore, SKS said in a filing to the Bombay Stock Exchange (BSE).

It said that the total provisioning and write-offs include Rs 58.74 crore relating to its portfolio in Andhra Pradesh.

In October last year, the Andhra Pradesh government had came out with an ordinance against the aggressive recovery practices of the micro-lenders and sought to restrict the high interest rates charged by them.

After a spate of suicides being reported in Andhra, which accounts for nearly 27 per cent of the company's total business, the state government sought to restrict the lending rates, which could run up to as high as 30 per cent.

Following the Ordinance, SKS has cut its annual rate of interest for the state to 24.55 per cent from 26.69 per cent.

Meanwhile, the shares of SKS Microfinance closed 1.03 per cent lower at Rs 684.10 on the BSE.