Kolkata: The small finance bank pack, which reported their quarterly earnings Friday, faced pressure on profitability either due to higher credit cost or higher expenditure. The lenders however exuded confidence of improvement in credit quality from the unsecured business from the third quarter.
AU Small Finance Bank, the biggest among them, booked a 2% lower net profit at Rs 561 crore for the second quarter of the fiscal as against Rs 571 crore in the year-ago period, owing to 29% higher provision as the lender faced deterioration in asset quality.
AU, which is in the midst of a transition to a universal lender having received the licence in August, has a gross loan portfolio of Rs 1.23 lakh crore.
All the three lenders faced net interest margin contraction. AU's NIM for the second quarter stood at 5.5% against 6.1% earlier. The ratio for Jana and Ujjivan was sharply down 6.6% from 7.8% and 7.9% from 9.2% respectively.
AU's operating rose stood 7% higher at Rs 1210 crore for the quarter under review against Rs 1132 crore in the year ago period. However, higher provisions at Rs 481 crore against Rs 373 crore led to a fall in the net profit. The bank's net interest income was 9% higher at Rs 2144 crore while other income rose 12% at Rs 713 crore.
AU saw its loan book growing 17% while the unsecured lending contracted. "The unsecured credit quality is on the cusp of recovery... portfolio growth to resume," the bank said.
Ujjivan reported a 48% drop in second quarter net profit at Rs 122 crore as compared with Rs 233 crore in the year ago period, owing not only to higher provisions but also to a fall in net interest income and higher operating expenses.
Its second quarter provision stood at Rs 235 crore, 56% higher than the year-ago period's Rs 151 crore. Its operating profit was down 14% at Rs 395 crore against Rs 461 crore a year back as rise in total expenditure outweighed rise in total income. Total income was higher at Rs 1939 crore against Rs 1820 crore while total expenditure was higher at Rs 1544 crore against Rs 1359 crore.
Its net interest income was lower at Rs 922 crore against Rs 944 crore while operating expenses were higher at Rs 783 crore against Rs 690 crore.
The bank's asset quality remained steady with gross non-performing assets ratio being at 2.45% at the end of September, a tad lower from 2.52% seen a year back. Its gross loan portfolio expanded 14% year-on-year to Rs 34588 crore with share of secured book rising to 47% from 35% a year back.
Jana's net profit stood 23% lower at Rs 75 crore against Rs 97 crore earlier while operating profit was 7% down at Rs 279 crore as compared with Rs 299 crore earlier. Provision was at Rs 204 crore against Rs 210 crore while gross NPA ratio improved to 2.87% at the end of September from 2.97% a year back.
The bank's total income stood at Rs 1552 crore against Rs 1342 crore while total expenditure was higher at Rs 1273 crore against Rs 1043 crore. Net interest income was higher at Rs 618 crore against Rs 594 crore while other income also rose at Rs 247 crore as compared with Rs 176 crore.
Jana's gross loan portfolio stood at Rs 31655 crore with the share of secured assets was 73%. The management plans to raise the secured share to 80%.
"This strategic shift is expected to lead to a reduction in credit costs over the coming financial years in case of any high stress environment in the MFI industry," Jana said.
Ujjivan, meanwhile saw highest ever quarterly disbursements at Rs7,932 crore reflecting a 48% year-on-year rise. Its slippage was lower at Rs 278 crore due reduced stress in micro-banking portfolio.
AU Small Finance Bank, the biggest among them, booked a 2% lower net profit at Rs 561 crore for the second quarter of the fiscal as against Rs 571 crore in the year-ago period, owing to 29% higher provision as the lender faced deterioration in asset quality.
AU, which is in the midst of a transition to a universal lender having received the licence in August, has a gross loan portfolio of Rs 1.23 lakh crore.
All the three lenders faced net interest margin contraction. AU's NIM for the second quarter stood at 5.5% against 6.1% earlier. The ratio for Jana and Ujjivan was sharply down 6.6% from 7.8% and 7.9% from 9.2% respectively.
AU's operating rose stood 7% higher at Rs 1210 crore for the quarter under review against Rs 1132 crore in the year ago period. However, higher provisions at Rs 481 crore against Rs 373 crore led to a fall in the net profit. The bank's net interest income was 9% higher at Rs 2144 crore while other income rose 12% at Rs 713 crore.
AU saw its loan book growing 17% while the unsecured lending contracted. "The unsecured credit quality is on the cusp of recovery... portfolio growth to resume," the bank said.
Ujjivan reported a 48% drop in second quarter net profit at Rs 122 crore as compared with Rs 233 crore in the year ago period, owing not only to higher provisions but also to a fall in net interest income and higher operating expenses.
Its second quarter provision stood at Rs 235 crore, 56% higher than the year-ago period's Rs 151 crore. Its operating profit was down 14% at Rs 395 crore against Rs 461 crore a year back as rise in total expenditure outweighed rise in total income. Total income was higher at Rs 1939 crore against Rs 1820 crore while total expenditure was higher at Rs 1544 crore against Rs 1359 crore.
Its net interest income was lower at Rs 922 crore against Rs 944 crore while operating expenses were higher at Rs 783 crore against Rs 690 crore.
The bank's asset quality remained steady with gross non-performing assets ratio being at 2.45% at the end of September, a tad lower from 2.52% seen a year back. Its gross loan portfolio expanded 14% year-on-year to Rs 34588 crore with share of secured book rising to 47% from 35% a year back.
Jana's net profit stood 23% lower at Rs 75 crore against Rs 97 crore earlier while operating profit was 7% down at Rs 279 crore as compared with Rs 299 crore earlier. Provision was at Rs 204 crore against Rs 210 crore while gross NPA ratio improved to 2.87% at the end of September from 2.97% a year back.
The bank's total income stood at Rs 1552 crore against Rs 1342 crore while total expenditure was higher at Rs 1273 crore against Rs 1043 crore. Net interest income was higher at Rs 618 crore against Rs 594 crore while other income also rose at Rs 247 crore as compared with Rs 176 crore.
Jana's gross loan portfolio stood at Rs 31655 crore with the share of secured assets was 73%. The management plans to raise the secured share to 80%.
"This strategic shift is expected to lead to a reduction in credit costs over the coming financial years in case of any high stress environment in the MFI industry," Jana said.
Ujjivan, meanwhile saw highest ever quarterly disbursements at Rs7,932 crore reflecting a 48% year-on-year rise. Its slippage was lower at Rs 278 crore due reduced stress in micro-banking portfolio.
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