CreditAccess Grameen slips after Q2 PAT falls 8% YoY on higher provisioning

CreditAccess Grameen fell 3.41% to Rs 598.90 after the company reported 7.9% fall in standalone net profit to Rs 71.99 crore despite 8.3% rise in total income to Rs 510.33 crore in Q2 FY22 over Q2 FY21.

The microfinance institution recorded an operating profit of Rs 194.71 crore in the second quarter, up 10.5% YoY.

Provisions and write-offs increased by 39.5% to Rs 91.12 crore in Q2 FY22 from Rs 65.32 crore in Q2 FY21.

Profit before tax in Q2 FY22 stood at Rs 97.11 crore, down by 7.3% from Rs 104.80 crore in Q2 FY21.

Gross non-performing asset (GNPA) ratio was 7.18% in Q2 FY22 as against 1.64% in Q2 FY22 and 8.12% in Q1 FY22.

Disbursements were Rs 3,412 crore in Q2 FY22 as against Rs 1,420 crore in Q2 FY21 and Rs 907 crore in Q1 FY22.

Gross Loan Portfolio (GLP) increased by 21.5% to Rs 11,184 crore in Q2 FY22 from Rs 9,207 crore in Q2 FY21. GLP has risen by 5.3% from Rs 10,625 crore in Q1 FY22.

CreditAccess Grameen restructured loans aggregating Rs 99.1 crore in Q2 FY22 as against Rs 6.9 crore in Q1 FY22. Overall, the MFI has restructured loans aggregating Rs 183.1 crore (including restructuring of loans worth Rs 77.1 crore done in FY21). Total provisioning on restructured loans, which account for 1.5% of GLP as on September-end 2021, was 28.8%.

CreditAccess Grameen's consolidated net profit, which includes the results of three subsidiaries viz. Madura Micro Finance (MMFL), Madura Micro Education and CreditAccess India Foundation, declined 19.7% to Rs 63.57 crore on a 7.2% rise in total income to Rs 618.58 crore in Q2 FY22 over Q2 FY21.

Udaya Kumar Hebbar, MD and CEO of CreditAccess Grameen, said, The signs of significant rebound in the rural economy during Q2 FY22 augurs well for our company as we were able to disburse Rs 3,890 crore and contribute to the rural capital creation story across the country. Our consolidated portfolio grew by 19.2% YoY to Rs 13,333 crore in Q2 FY22.

Our collection efficiency consistently improved to 93.3% at CA Grameen and 87% at MMFL in Sep-21. We opened 121 branches in Q2 FY22, primarily in the newer markets like Uttar Pradesh, Bihar, Chhattisgarh, Gujarat, Jharkhand and Rajasthan.

As a part of completion of the process integration with MMFL, we have aligned MMFL's provisioning policy with CA Grameen, recognising GNPA at 60+ dpd compared to 90+ dpd. While this led to higher provisioning during the second quarter, we considered this at an appropriate time given that all the process, policies and operating model have been integrated under one umbrella.

We maintained strong business momentum in Oct-21, disbursing Rs 1,372 crore resulting in consolidated portfolio growth of 20.2% YoY to Rs 13,647 crore. Collection efficiency further improved in Oct-21 to 94.3% for CA Grameen and 87% for MMFL. We opened another 21 branches in Oct-21, taking the total branch network to 1,566. Overall, we added near 2 lakh new borrowers during Jul-21 to Oct-21.

Assuming that there are no further severe business disruptions on account of Covid, we look forward to achieving loan portfolio growth of 17%-19% with a credit cost of 4.7%-4.9% resulting in an ROA of 1.8%-2.0% for the FY22.

CreditAccess Grameen is a microfinance institution focused on providing micro-loans to women customers predominantly in rural areas across India. The company, on consolidated basis, is now operating in 303 districts in the 14 states in India through 1,566 branches.

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