Magma Fincorp Q2 net profit rises 14%
Nov 01 2013 , Kolkata
“In the back drop of a tough economic environment and inconsistent cash flows in our customer’s hands we remain focussed on improving our profitability and portfolio quality. Being consistent with this focus, we have improved our net spreads by 102 bps yoy and continue to work on our portfolio quality,” said Sanjay Chamria, vice chairman and managing director, Magma Fincorp Limited.
He said, “On the asset quality front, in line with our conservative approach to loss accounting, we have made a significant amount of provisioning for NPAs in the last two quarters. With the monsoons doing well and expectations of an uptick in commercial activity post monsoons, we expect the economic environment to improve and cash flows in the customers hand to stabilise. The second half of the year normally sees an improvement in collections and we expect an improvement in collection efficiency across all products in the coming quarters.”
The company, having earlier adopted the draft recommendations of the Usha Thorat committee, makes provisions for NPAs at 120 dpd against the regulatory requirement of 180 dpd. The impact of higher NPA provisioning was partly cushioned by the 102 bps increase in NIS and 34 per cent growth in earning loan assets. Additionally, the company has also made higher standard asset provisioning at 0.30 per cent against 0.25 per cent mandated by the regulator.