Muthoot Microfin’s Q2 net profit falls ~44% to ₹61 Crore

6 Nov 2024 , 09:17 AM

Muthoot Microfin’s net profit for the second quarter fell 44% year on year to ₹61.6 Crore, owing mostly to stress in the microfinance industry and increased labour costs.

Last year’s net profit was ₹110 Crore.

Operating profit, however, was 26% higher, at ₹236 Crore.

The company set aside ₹155 Crore to cover bad loans in the quarter, up from ₹41 Crore in the previous year.

The gross non-performing assets ratio jumped to 2.7% at the end of September from 2.3% a year ago.

Employee costs for the quarter increased by ₹133 Crore compared to ₹111 Crore.

The lender’s total income was 18% higher, at ₹667 Crore versus ₹566 Crore. 

The microlending business has been experiencing rising headwinds after going on a lending binge until recently, resulting in a high level of delinquencies, which industry and analysts admit accounts for at least a third of their loan book. Most of these companies have taken on new borrowers who had previously borrowed from two or more other lenders, resulting in overleverage and the inability to pay any of their lenders.

The Delhi-based company said in a statement Tuesday that profit was hit since it had budgeted for an additional overlay of ₹31 Crore to handle the expanding industry concerns and any further impact from disruption in the field due to floods or political activity.

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