SKS Microfinance, India’s only listed microfinance institution, reported financial performance that reflected the declining market conditions for the Indian microfinance sector in the wake of a spate of refusals to repay loans in the company’s home state of Andhra Pradesh in October and November of 2010. Net income declined 36% to $42.7 million and a net loss $15.4 million for the first three months of 2011. This is in contrast to net profit of $14 million for the same quarter last year.
Posted by Rohan Trivedi in Category: Asia,Trends/Challenges at 12:03 am
SKS Microfinance, a for-profit Indian microfinance institution, reported a decline of 36 percent in total income to INR 193.8 crores (USD 42.7 million) and a net loss of INR 69.8 crores (USD 15.4 million) for the first three months of 2011, as compared with a net profit of INR 62.9 crores (USD 14 million) in the same quarter last year. Total expenditures rose 70 percent to INR 211.7 crores (USD 46.6 million) in the fourth quarter of 2011, driven by a sevenfold increase in loan loss provisions and write-offs. Loans and advances stood at INR 3,653.5 crores (USD 804.8 million) on March 31, 2011, compared to INR 3,015.7 crores (USD 669.7 million) on March 31, 2010 .
For the fiscal year ending March 31, 2011, SKS reported total revenue growth of 32 percent to INR 1,269.5 crores (USD 280 million), while net profit decreased by 35 percent to INR 111.6 crores (USD 24.6 million), as personnel expenses, provisions and write-offs increased expenditures . According to an SKS press release, credit costs rose from INR 51 crores (USD 11.3 million) in the 2009-10 fiscal year to INR 317 crores (USD 70 million) in 2010-11, because of “aggressive provisioning” by SKS, exceeding the guidelines established by Reserve Bank of India (RBI) .
According to 2010 data from the US-based nonprofit data provider Microfinance Information Exchange (MIX), SKS Microfinance reported total assets of USD 1.2 billion, a gross loan portfolio of USD 1.2 billion, approximately 6.6 million borrowers, return on assets (ROA) of 6.3 percent and return on equity (ROE) of 22.4 percent.
By Rohan Trivedi, Research Associate
About SKS Microfinance Limited:
SKS Microfinance is a microfinance institution (MFI) that was launched in 1998 and delivers microfinance products through a group-lending model to impoverished women in India. It is a for-profit, non-banking finance company that converted to a public limited company in May 2009 and launched an initial public offering on July 28, 2010. Equity investors include Quantum Hedge Fund, Sequoia Capital, Vinod Khosla, Small Industries Development Bank of India, Bajaj Allianz, Yatish Trading, Kismet Capital, Sandstone Capital, Silicon Valley Bank and Unitus. According to 2010 data from the US-based nonprofit data provider Microfinance Information Exchange (MIX), SKS Microfinance reported total assets of USD 1.2 billion, a gross loan portfolio of USD 1.2 billion, approximately 6.6 million borrowers, return on assets (ROA) of 6.3 percent and return on equity (ROE) of 22.4 percent.
Sources and Additional Resources:
 SKS Microfinance Limited Press Release: “Audited Financial Results for the Year Ended March 31, 2011?, http://www.sksindia.com/downloads/SKS_Microfinance_March_31_2011.pdf
 SKS Microfinance Limited Press Release: “Q4 and annual results for FY 2010-11?, http://www.sksindia.com/downloads/press_release_Q4.pdf
MicroCapital.org story, February 10, 2011: “MICROCAPITAL BRIEF: SKS Microfinance of India Increases Loan Loss Provision, Reports 38% Fall in Quarterly Net Profit”, http://www.microcapital.org/microcapital-brief-sks-microfinance-of-india-increases-loan-loss-provision-reports-38-fall-in-quarterly-net-profit/
MicroCapital Universe Profile: SKS Microfinance, http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance
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