(Reuters) -India’s Manappuram Finance reported a surprise fourth-quarter loss on Friday, hurt by a surge in bad loans in its microfinance vertical.
Indian lenders have been reporting rising default rates in microfinance loans, or collateral-free small loans to borrowers, following a period of aggressive lending in the segment.
Bad loans and provisions in Manappuram’s microfinance unit rose over five-fold to 8.49 billion rupees ($99.48 million), accounting for a large chunk of total company-wide provisions of 9.19 billion rupees.
The gold loan financier’s consolidated net loss was 1.91 billion rupees for the January-March period, compared with a profit of 5.62 billion rupees a year earlier.
Analysts were expecting a profit of 2.91 billion rupees, per data compiled by LSEG.
Meanwhile, Manappuram’s gold loan portfolio rose 14% to 18.50 billion rupees as bullion prices hit multiple record highs in the January-March period. The segment contributes 75% of total revenue.
Rising gold prices increase how much a customer can borrow against bullion, benefiting gold financiers in terms of loans issued.
The company’s total assets under management rose 2.3% to 430.34 billion rupees, while its net interest income – the difference between interest earned and paid out – declined 6.7% to 14.64 billion rupees.
($1 = 85.3480 Indian rupees)
(Reporting by Nishit Navin; Editing by Krishna Chandra Eluri)
