Fusion Finance Sinks 20% After Q1 Loss, Higher NPAs

7 Aug 2024 , 10:46 AM

Fusion Finance Ltd, formerly known as Fusion Micro Finance Ltd, slumped 20% on stock exchanges early on Wednesday after reporting a quarterly loss and an increase in bad loans.

Shares of the microlender, which listed on stock exchanges in November 2022 after selling shares at ₹368 apiece in the IPO, hit the lower circuit of ₹346.80, down from Tuesday’s close of ₹433.50 on the BSE.

The drop came after the lender said late Tuesday it swung to a net loss of ₹35.62 crore for the first quarter ended June 30, from a net profit of ₹120.46 crore a year earlier.

The company’s expected credit loss (ECL) nearly doubled to ₹644.06 crore in Q1 from ₹328.38 crore a year earlier, as gross non-performing assets jumped to 5.46% from 3.20%.

“We noticed delinquency trends in certain pockets due to over-leverage and external factors. Due to which we have done early risk recognition and tightened our ECL model leading to higher than usual provisioning in this quarter that had an impact on our overall profitability,” said Devesh Sachdev, MD & CEO, Fusion Finance.

Fusion also said its net interest income increased by 34.85% year on year to ₹396.55 crore while net interest margin widened to 11.64% from 10.89%. Its assets under management grew 25.54% to ₹12,192.58 crore and loan disbursements jumped 30.73% to ₹2,986.65 crore.