Mumbai, 6th February 2025: Muthoot Microfin Limited (NSE: MUTHOOTMF, BSE: 544055) reported a deterioration in its asset quality for the third quarter of FY25, with Gross Non-Performing Assets (GNPA) rising to 3.03% from 2.29% a year ago. The Net NPA also increased to 1.27% compared to 0.87% in the same period last year, highlighting stress in the company’s loan book despite strong growth in other key metrics.
The company’s Assets Under Management (AUM) grew by 8.3% year-on-year to Rs. 12,405 crore, up from Rs. 11,458 crore in Q3 FY24. Total income rose 17.7% YoY to Rs. 681 crore, while Net Interest Income (NII) increased by 23.1% to Rs. 420 crore. The Net Interest Margin (NIM) improved by 78 basis points to 13.3%.
Pre-Provision Operating Profit (PPOP) grew by 36.6% YoY to Rs. 252 crore. However, Profit After Tax (PAT) for the quarter declined sharply to Rs. 4 crore from Rs. 125 crore in the previous year, primarily due to a significant increase in provisioning costs, which stood at Rs. 247 crore, influenced by macroeconomic uncertainties and regulatory changes.
Thomas Muthoot, Chairman & Non-Executive Director of Muthoot Microfin, acknowledged the challenging macroeconomic environment and highlighted the company’s efforts to balance operational efficiency with asset quality. “Our disciplined underwriting policies and robust collection mechanisms have helped us manage stress effectively,” he said.
Sadaf Sayeed, CEO of Muthoot Microfin, noted that while the microfinance sector faces regulatory and macroeconomic challenges, the company remains committed to maintaining strong asset quality. “We have proactively increased provisions to address growing overleverage concerns in the industry,” Sayeed said.
The company also reported strong liquidity with Rs. 788 crore in unencumbered cash and cash equivalents, and a healthy Capital to Risk-Weighted Assets Ratio (CRAR) of 30.5%. Digital transactions accounted for 25% of collections, while all disbursements were fully digital.
Muthoot Microfin expects continued challenges due to regulatory changes set to take effect in April 2025 but remains optimistic about its growth trajectory supported by strong fundamentals and operational resilience.