The lender’s standalone net profit rose 29.9% year-on-year to Rs 502.57 crore in the quarter ended June, according to an exchange filing on Thursday. Net interest income, or core income, for the lender increased 54% year-on-year to Rs 1,921 crore.
“We articulated two very clear guardrails in terms of securing the overall profitability and balance sheet—one was keeping the overall size of the microfinance business at about 10% of the overall AUM or the loan portfolio,” the management said while explaining details about the portfolio.
The MFI industry is cyclical, which normally happens. Hence, collection efficiencies are a lot slower than usual, the management said.
The bank is now seeing some pressure in some areas and states. “MFI business was built around its own risk guardrails, which were besides the operating, the quality and all the operating work that we do,” it said.
One of the guardrails the bank had was that none of its states would have greater than 12.5% exposure. “Our top three states have about 35% exposure. We operate in about more than 300 districts.”
One of the reasons for this has also been some signs of over-leverage among customers and some election-related disruptions, the management explained.
