Manappuram Finance Q3FY25 results: Net profit halves to Rs 282 crore

Indian gold loan financier Manappuram Finance reported a third-quarter profit that missed analysts' estimates on Thursday, hurt by the stress in its microfinance business, including a quarter-long ban from issuing loans.

The company's consolidated net profit halved to Rs 282 crore ($32.5 million) in the quarter, missing analysts' average estimate of Rs 459 crore, as per data compiled by LSEG.

Indian lenders have seen rising default rates in microfinance loans, or collateral-free small loans to borrowers, following a period of aggressive lending in the segment. 

 

Bad loans and provisions in Manappuram's microfinance unit surged four-fold to Rs 473 crore, accounting for a large chunk of total company-wide provisions of Rs 555 crore in the October to December quarter.

 

At the start of the period, the Reserve Bank of India (RBI) had barred the unit from sanctioning and disbursing loans due to "usurious" pricing and for charging a significant mark-up over funding costs. The RBI lifted the ban last month.

As a result, revenue in its microfinance business dropped around 5 per cent to Rs 665 crore in the quarter.

However, revenue from Manappuram's gold loan portfolio, which contributes 75 per cent of total revenue, rose 17 per cent, aided by gold prices jumping to record highs.

Rising gold prices increase how much a customer can borrow against bullion, benefiting gold financiers in terms of loans issued.

The company's net interest income rose 5 per cent.

While Manappuram missed analysts estimates, its larger rival Muthoot Finance rode the increase in gold prices to report a bigger-than-expected quarterly profit on Wednesday.