SKS net down 38.4%

SKS Microfinance Limited reported a 38.4 per cent fall in its net profit to Rs 34.15 crore for the quarter ended December 31, 2010, as compared with Rs 55.45 crore in the corresponding period last year. Revenues during the quarter increased 44.5 per cent to Rs 384.68 crore from Rs 266.21 crore.

Expenditure during the quarter also increased over two-fold to Rs 240.64 crore from Rs 106.54 crore. The total provisioning and write off for the third quarter stood at Rs 100.75 crore, including an additional provisioning of Rs 26.98 crore following the recommendations of the Malegam Committee that recently submitted its report on the microfinance sector.

According to the recommendations, an MFI is required to maintain at all times an aggregate provision for loan losses whichever is higher of three — one per cent of the outstanding loan portfolio or 50 per cent of the aggregate loan installments, which are overdue for more than 90 days and less than 180 days, or 100 per cent of the aggregate loan installments which are overdue for 180 days.

Andhra Pradesh, which brought in the Andhra Pradesh Micro Finance Institutions (Regulation of Money Lending) Act in December, accounted for more than 50 per cent (Rs 58.74 crore) of the total Rs 100.75 crore provisioning and write-offs.

The company in a filing to the Bombay Stock Exchange said it would continue to assess the adequacy of provision on the AP loan portfolio, including assigned loans, due to the evolving environment following the Act and the resultant impact on the field operations, and also based on the outcome of the legal suit pending before the Andhra Pradesh High Court challenging the Act.

The earnings per share during the quarter dropped to Rs 4.74 as compared with Rs 10.64 last year.