SKS Cuts Lending Rates by 1 Per Cent on Lower Fund Cost, Profit Rise
Mumbai: With some respite in its borrowing cost in the first quarter due to the profit it had made last year and on higher capital base, SKS Microfinance has announced 1 percentage point reduction in lending rates.
The only listed micro-lender said effective October 1, it will charge 23.55 per cent interest rate from its borrowers as against the prevailing 24.55 per cent.
The announcement comes on back of the company reporting a manifold jump in June quarter net income at Rs 49.32 crore from Rs 4.96 crore in the year-ago period.
Explaining the rationale behind reduction in lending rates, SKS Microfinance president Dilli Raj said the company is passing on the cost advantages accruing from economies of scale, operational efficiency and reduction in the cost of borrowing.
"The improvement in our ratings on account of a full year profit of Rs 70 crore in FY14 and Rs 400 crore we raised from institutional investors in May this year has helped bring down our fund cost in the first quarter. So we are passing on this to our customers," Mr Raj told PTI.
The Hyderabad-based company's cost of borrowing came down by nearly 1 percentage point to 12.6 in first quarter of the current fiscal year from 13.5 per cent for FY14. Its short-term ratings were upgraded from 'A1' to 'A1+', while the long-term ratings improved to 'A+' from 'A2'. This improvement in ratings has given banks confidence in SKS which resulted into access to cheaper funds, Mr Raj added.
In the three months to June, SKS reported an 11-fold rise in net profit to Rs 49.32 crore from Rs 4.96 crore in the corresponding quarter last year. It had an incremental draw-downs of Rs 575 crore in the reporting quarter.
Net interest income grew by 41 per cent at Rs 89 crore from Rs 63 crore last year. SKS' portfolio, excluding Andhra Pradesh and Telangana, posted 39 per cent Y-o-Y increase at Rs 2,783 crore in the June quarter from Rs 2,003 crore.
Loan disbursements grew 40 per cent to Rs 1,160 crore in Q1 from Rs 830 crore a year ago, while its networth stood at Rs 891 crore and capital adequacy at 39.6 per cent. The company had cash and cash equivalents of Rs 488 crore at the end of the reporting period.
The firm said the unavailed deferred tax benefit of Rs 542 crore would be available to offset tax on future taxable income. Given the carried forward tax loss, it did not made any tax provision in the first quarter.
-
Signature Play: The Classic Cocktail Is Dead. Or Is It?
Classic cocktails are disappearing from India's cocktail menus. But they're still being ordered, taught to bartenders and borrowed from. So, who's really having the last drink?
-
A New Samvat Wishlist: Inclusive Prosperity And Human Development
India has strengthened its economic foundations through infrastructure, digital access and enterprise. Its next growth chapter must deepen productivity, create better livelihoods and widen participation in prosperity.
-
Love, Sex Aur Dhokha: The Audacious Plot To Spy On Jensen Huang
A Taipei dinner, a Singapore chip buyer and a suspected Chinese asset: inside the alleged spy operation that got close to NVIDIA's Jensen Huang.
-
Ten Things I Learnt This Samvat
Patience can be a trap. Cheap stocks can stay cheap. Leverage can wipe you out. What did Samvat 2082 teach us? Niraj Shah writes on 10 lessons from the year gone by.
-
Talking Points This Week: Tech Nerves, FII Buying, And A Faraway Banking Shock
The global markets are not shining this Diwali. The exception in the large markets is, India.
-
Midterm Rally Lasted A Day. The Hard Reality Of A Divided US May Last Two Years | Opinion
Between a contested AI boom, a debt ceiling that arrives in 2027 and a president with every incentive to act alone, the next two years may prove more volatile than the first day's rally suggests.
-
Blue Wave Will Derail the AI Trade but Won't Dismantle the AI Era | Unhedged Position
The Democrats' sweep of the US Congress will see politics collide with economic forces both over the long and short term.
-
It's Time To Take The GST Council's Bet On Trust Global
Payment records can prove India's services exports, and clear, proportionate rules can bring foreign digital sellers into the tax net.
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
