SKS Microfinance, an Indian microlender listed on the country’s National and Bombay Stock Exchanges, recently reported a net profit of INR 11.5 million (USD 209,000) for the quarter ending December 2012, the first quarterly profits for SKS Microfinance in two years. Loans disbursed rose 14 percent to INR 7.8 billion (USD 142 million). The company reported a loss of INR 4.3 billion (USD 78.2 million) for the same period last year.
Microfinance institutions (MFIs) have been faced with bad repayment rates in the Indian state of Andhra Pradesh since the state government passed a law in 2010 tightening regulations after allegations of coercive methods of loan recovery and faulty business practices in the sector. SKS Microfinance reduced its number of employees from approximately 25,700 to 11,200 in the two years through December. Shares in the company are trading at INR 149.50 (USD 3.189) as of February 5, 2013, down from INR 985 (USD 21) in August 2010.
By Nicole Boyd, Research Associate
About SKS Microfinance
SKS Microfinance is a for-profit microfinance institution (MFI) that was launched in 1998. SKS converted into a public limited company in May 2009 and launched an initial public offering on July 28, 2010. It since diversified into offering gold loans and loans to small stores. SKS currently trades on the Bombay Stock Exchange and India’s National Stock Exchange. As of September 30, 2012, SKS reported total assets of USD 354 million and a gross loan portfolio of USD 250 million disbursed to approximately 3.9 million borrowers. As of March 2012, SKS reported return on assets (ROA) of -45.8 percent and return on equity (ROE) of -111 percent. SKS does not accept deposits.
Sources and Additional Resources:
Wall Street Journal. “SKS Microfinance Posts Profit After Seven Quarters,” http://online.wsj.com/article/SB10001424127887323539804578261481324482350.html
The Economic Times. “RBI, Andhra Pradesh government in a spat over microfinance bill,” http://articles.economictimes.indiatimes.com/2012-07-30/news/32942117_1_microfinance-yh-malegam-committee-nbfcs
MicroCapital. October 4, 2012, “MICROCAPITAL BRIEF: SKS Microfinance of India Posts Portfolio Growth of 21% Outside Andhra Pradesh; Royal Bank of Scotland, Morgan Stanley Asia Purchase Stakes as Deutsche Securities Mauritius Cashes Out,” https://www.microcapital.org/microcapital-brief-sks-microfinance-of-india-posts-portfolio-growth-of-21-outside-andhra-pradesh-royal-bank-of-scotland-morgan-stanley-asia-purchase-stakes-as-deutsche-bank-cashes-out/
MicroCapital. August 9, 2011, “MICROCAPITAL BRIEF: Industry Players Say Indian Microfinance Institutions Should Not be Crushed Even Though “Some MFIs Have Gone on the Wrong Path”,” https://www.microcapital.org/microcapital-brief-industry-players-say-indian-microfinance-institutions-should-not-be-crushed-even-though-“some-mfis-have-gone-on-the-wrong-path”/
MicroCapital Universe Profile: SKS Microfinance https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=SKS+Microfinance
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