The company announced its September quarter earnings after market hours on Friday (6 November 2020). The microfinance lender reported 21.5% drop in consolidated net profit to Rs 79.2 crore on a 32.2% rise in total income to Rs 340.5 crore in Q2 FY21 over Q2 FY20.

Profit before tax in Q2 September 2020 stood at Rs 106.7 crore, down by 16% from Rs 127 crore in Q2 September 2019. Total tax expense increased by 3.8% year-on-year (YoY) to Rs 27.1 crore during the quarter.

Net Interest Income (NII) rose by 31.6% to Rs 330.9 crore in Q2 FY21 from Rs 251.4 crore in Q2 FY20. Gross loan portfolio grew by 41.5% YoY from Rs 7,905 crore to Rs 11,183 crore. Borrowers grew by 47.0% YoY from 26.4 lakh to 38.8 lakh.

The company's impairment of financial instruments surged 220.5% to Rs 90.2 crore in Q2 September 2020 from Rs 28.1 crore in Q2 September 2019. The total standard asset provisioning (excluding GNPA) was Rs 369.8 crore (3.40% of loan portfolio).

Total expect credit loss (ECL) provisions was Rs 561.9 crore (5.17% of loan portfolio). This includes additional provisions on account of COVID-19 impact, apart from overlay built in for previous comparable risk events in the ECL methodology in FY21.

The company's asset quality is stable with GNPA of 1.77% and NNPA of 0%. However, considering no change in NPA recognition after 31 August 2020 in accordance with the supreme court order, the GNPA is 1.58%.

As 30 September 2020, the company's cash or bank balance and liquid investments were Rs 1,905.8 crore, amounting to 14.8% of total assets.

Commenting on the performance, Udaya Kumar Hebbar, managing director and CEO of CreditAccess Grameen (CAGL), said, "We recorded 16.5% YoY growth in standalone loan portfolio to Rs 9,207 crore and 6.1% YoY growth in borrower base to 28 lakh. This was further augmented by Madura Micro Finance (MMFL) acquisition, leading to consolidated loan portfolio growth of 41.5% YoY to Rs 11,183 crore and 47% YoY growth in borrower base to 38.8 lakh.

In line with the first quarter, we continued to focus on stabilising field collections, maintaining continuous customer connect and mobilising sufficient liquidity in the second quarter. Despite several intermittent localised lockdowns/ restrictions, we were able to increase our collection efficiency from 74% in June to 88% in September and 89% in October.

Even in case of MMFL, the collection efficiency improved from 54% in June to 83% in September and 85% in October. Collections temporarily slowed in second half of October due to cyclonic floods in certain districts of Maharashtra and Karnataka, intermittent lockdown imposed in Chhattisgarh and brief period of festivities in October.

Now, with the end in loan moratorium and restrictions getting largely relaxed to allow normative functioning of the economy, we expect further improvement in collections trend in November and December as more and more customers resume normal repayments.

With an increasing comfort on our customers' repayment behaviour, we gradually started stepping-up our disbursements, reaching Rs 1,420 crore at CAGL and INR 228 crore at MMFL in Q2 FY21 compared to INR 46 crore at CAGL and Rs 0.4 crore at MMFL in Q1 FY21. Our combined disbursements in the month of October stood at Rs 1,132 crore, indicating normative business growth going forward.

Our standalone liquidity position further improved during the second quarter, with cash & bank balance of Rs 1,662 crore as on 30 September 2020, on the back of continued support from our lenders and improving collections from field.

We also successfully completed Qualified Institutional Placement of Rs 800 crore in October, further bolstering our liquidity position. Overall, on the back of improving collections from field, robust liquidity position, adequate new branches, trained employees and adequate risk and capital buffers in place, our business strategy during remaining five months of FY21 will focus on portfolio growth and new customer additions, leveraging our leadership position in the microfinance industry."

CreditAccess Grameen is a microfinance institution focused on providing micro-loans to women customers predominantly in rural areas across India. The company is now operating in 230 districts in the 13 states and one union territory in the country through 929 branches.