Utkarsh Small Finance Bank expects slower loan growth in FY21 due to lockdown :CEO
The expected loan growth in 2020-21 is significantly lower than the 40 per cent growth in the company's loan portfolio in 2019-20, MD and CEO Govind Singh said.
The gross loan portfolio in 2019-20 stood at Rs 6,660 crore. The lender which began operations as a small finance bank in 2017, transiting from a microfinance lender since 2009, recorded nearly two-fold jump in net profit at Rs 186.74 crore in the last financial year as against Rs 93.89 crore in 2018-19.
The bank's income from operations too jumped by 48 per cent to Rs 1,307.68 crore in 2019-20 from Rs 881.04 crore a year ago.
"I think the type of growth we had seen last fiscal will be difficult to match. But certainly we wil have some growth vis-a-vis 40 per cent growth in our loan portfolio in FY20," Singh told in an interview.
"It(growth) might be restricted to around 15-20 per cent because, one the book (loan) may almost be flat till September because currently there is no movement. And secondly what happens is that for microfinance and other businesses (lending), the second half of the year picks up because of festivals such as Dusshera, Diwali and others," Singh told in an interview.
The small finance bank's bulk of the lending portfolio --89 per cent-- is towards microfinance, he said.
The second set of customers are those related to MSME and affordable housing segment while a little less than 5 per cent of the overall portfolio is towards small corporates.
However, Singh said there may be some kind of incremental demand of say 10-12 per cent over and above the current loan outstanding from the existing borrowers because their cash flows have been restricted due to the lockdown period in the last about two months.
He said the Varanasi-headquartered bank may even provide higher incremental loan if borrowers demand so.
When asked about the RBI-mandated moratorium, he said the bank expects nearly 30 per cent of the borrowers to be requiring the delayed payment facility while 70 per cent will continue paying back at regular pace.
Singh said the lender is telling people about the interest cost involved in opting for the moratorium.
"We are telling them there is an interest cost included. Currently, we are telling them that we can support them with 10-12 per cent of incremental loan, in case they require it, but that will be a marginal number only."
On the NBFC and HFC borrowers under the corporate loan portfolio, he said nearly 30 per cent of them have asked for the moratorium.
"Till April, all of them have paid but later on some of them were finding it difficult because their collections too were impacted during the lockdown period.
"So 30 per cent of the companies under the corporate loan have asked for moratorium and rest 70 per cent are paying regularly," he added.
On the demand side, there are two sets of customers like those who have received dry rations and jobs under the government's guaranteed employment for certain days under MNREGA, asking for loan.
Those borrowers in semi-urban and rural segment and in non-containment zones, who are not into providing essential services, they are also coming up regularly.
"They may require incremental money but not big money," he added.
However, challenges remain in containment zones, he added. KPM ANU ANU