CreditAccess Grameen , a leading microfinance institution, has reported its Q2 financial results, showcasing strong disbursement growth amidst rising credit costs. The company's performance reflects its resilience in a challenging market environment, with a focus on expanding its retail finance portfolio and managing asset quality.

Key Highlights

• Disbursements grew 32.9% year-on-year to Rs. 5,322.00 crore
• Net Interest Income increased 4.2% quarter-on-quarter to Rs. 976.00 crore
• Profit After Tax (PAT) stood at Rs. 126.00 crore
• Return on Assets (ROA) at 1.8% and Return on Equity (ROE) at 7.1%
• Added 2.2 lakh new borrowers, with 39% being new-to-credit customers
• Opened 96 new branches, taking the total branch count to 2,209

Financial Performance

CreditAccess Grameen's Q2 results demonstrate a mixed picture of growth and challenges:

Credit Costs and Asset Quality

The company reported an increase in credit costs due to accelerated write-offs of Rs. 554.70 crore related to non-paying accounts. Management has revised the credit cost guidance upward by 70-100 basis points and expects credit costs of 4-4.5% due to ECL provisioning rate increases.

Retail Finance Growth

CreditAccess Grameen's retail finance portfolio share increased significantly:

• Retail finance portfolio share rose to 11.1% from 6.8% in the previous quarter
• The company is focusing on expanding its retail finance offerings through microfinance branches

Business Expansion and Customer Acquisition

The company continues to focus on expanding its reach and customer base:

• Added 2.2 lakh new borrowers in Q2
• 39% of new borrowers were new-to-credit customers
• Opened 96 new branches, bringing the total branch count to 2,209

Management Commentary

Ganesh Narayanan, Managing Director and CEO, commented on the results: "We are pleased to report an improving trend in second quarter performance, reflecting consistent business momentum and stabilising asset quality. Despite the seasonally weaker nature of Q2, the outcome built on the strong trajectory established in Q1, demonstrates the underlying strength of our customer-centric business model."

Outlook

CreditAccess Grameen has implemented a 75 basis point increase in pricing for group loans to address the rising credit costs. The company maintains its AUM growth guidance of 12-14% and expects to see improved performance in the second half of the fiscal year.

The management anticipates that healthy monsoons, strong agricultural output, and strengthening rural ecosystem trends may drive robust on-ground demand in H2, potentially resulting in stronger loan portfolio growth.

As CreditAccess Grameen navigates through the evolving market environment, it continues to leverage its risk-based pricing strategy, low cost of borrowings, and efficient operating structure to protect its ROA within the 4-4.5% range, while maintaining its position as one of the lowest-cost lenders in the industry.

CreditAccess Grameen Limited , India's largest Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI), has reported a significant quarter-on-quarter improvement in its financial performance for Q2, despite facing seasonal headwinds.

Key Financial Highlights

• Net Profit: INR 125.80 crore, up 109% from INR 60.20 crore in Q1
• Total Income: INR 1,509.02 crore, a 3.1% increase from Q1
• Net Interest Income (NII): INR 975.90 crore, up 4.2% quarter-on-quarter
• Pre-Provision Operating Profit (PPOP): INR 694.80 crore, a 6.4% rise from Q1

Asset Quality Improvement

The company witnessed a gradual stabilization in asset quality:

• Gross Non-Performing Assets (GNPA) decreased to 3.65% from 4.70% in Q1
• Net Non-Performing Assets (NNPA) reduced to 1.26%
• Portfolio at Risk (PAR) 90+ days past due stood at 2.50%
• Provision coverage ratio improved to 66.27%

Business Growth

Despite the traditionally weaker second quarter, CreditAccess Grameen maintained robust business momentum:

• Gross Loan Portfolio (GLP) reached INR 25,904.00 crore, a 3.1% year-on-year growth
• Disbursements increased by 32.9% year-on-year to INR 5,322.00 crore
• Added 2.20 lakh new borrowers, with 39% being new-to-credit
• Retail Finance portfolio crossed the INR 2,500.00 crore mark

Operational Metrics

The company continued to expand its reach and operational capacity:

• Branch network grew by 8.8% year-on-year to 2,209 branches
• Employee base increased by 10.9% year-on-year to 21,701
• Collection Efficiency (including arrears) improved to 94.9% in September

Management Commentary

Mr. Ganesh Narayanan, Managing Director and CEO, stated, "We reported an improved second-quarter performance, reflecting consistent business momentum. Despite the seasonally weaker nature of the second quarter, the outcome built on the strong trajectory established in Q1, demonstrates the underlying strength of our business."

New Leadership Appointment

The company announced the appointment of Mr. Manoj Kumar as the Chairman of the Board, effective October 28. Mr. Kumar, who has been a board member since October 2019, brings extensive experience in banking, capital markets, and fintech to his new role.

Outlook

CreditAccess Grameen remains optimistic about its future performance, citing the following factors:

• Consistent deleveraging with a reduction in borrowers with multiple lenders
• Increasing share of unique borrowers, reaching 41.3% in September
• Declining new PAR accretion driving sequential reduction in credit costs
• Strong liquidity position with INR 2,175.50 crore in cash, cash equivalents, and investments

The company's focus on rural markets, customer-centric approach, and improving asset quality position it well for sustained growth in the coming quarters.

Note: All figures are based on standalone financial results unless otherwise specified.