Loans mostly performing, turnaround story continues: SKS

Hyderabad-based SKS Microfinance, which had gone through a turbulent phase sprang a positive surprise by reporting a net profit of Rs 5 crore in the first quarter (April-June) against a net loss of Rs 39 crore in the corresponding quarter of the previous financial year. Coming out of the woods, the company managed to post a net profit for three consecutive quarters.

"Fully providing for AP exposure, managing the supply side shock, optimizing the cost structure are the building blocks of our turnaround," SKS Microfinance said in a press conference. Also Read: SKS Microfinance posts Q1 net at Rs 5 cr 
The company expanded its loan disbursements by 51 percent y-o-y to Rs 830 crore. Average portfolio outstanding was up 14 percent, core income interest reported a growth of 22 percent, from Rs 90 crore to Rs 110 crore. The company reported a q-o-q growth of 22 percent in core interest income, which compares favourably with 13 percent in the previous quarter. Gross revenues were up 21 percent and operating profit jumped four-fold from Rs 4 crore to Rs 16 crore.
During the quarter, SKS Microfinance made a provisioning of Rs 11 crore on account of standard assets or performing loans. 
The Reserve Bank of India has mandated 1 percent provisioning for standard assets from FY14 onwards in the NBFC-MFI sector. The company was provisioning 0.25 percent.
On credit quality indicators, collection efficiency of 99.9 percent has been maintained for this quarter. This suggests, borrowers are repaying their micro loans almost to the full extent.
The company maintained a capital adequacy of 30 percent, which is above the minimum level.