Arman Financial Reports Highest Ever Annual Profit After Tax of ? 41.5 Crores in FY20
- Consolidated AUM grows to ? 860 Crores; up 26% Y-o-Y
AHMEDABAD, India, June 30, 2020 /PRNewswire/ -- Arman Financial Services Limited (Arman), a Gujarat based non-banking financial company (NBFC), with interests in microfinance, two-wheelers, and micro-enterprise (MSME) loans, announced its financial results for the fourth quarter and full year ended 31st March 2020.
Consolidated Financial Highlights - Q4 FY2020
Consolidated Financial Highlights - FY2020
Update on Liquidity
Commenting on the company's performance in FY20, Mr. Jayendra Patel, Vice Chairman & Managing Director, Arman Financial Services said, "Arman reported its highest ever annual net profit of ? 41.5 crores in FY20, despite facing multiple external and macro-economic challenges during the year. To deal with any potential deterioration in the asset quality in FY21, we have prudently earmarked ? 6.7 crores (0.8% of AUM) as contingent provision for COVID and further undertaken an aggressive write-off of ? 3.9 crores for the pre-COVID NPAs. A combination of sustained strong growth in the MFI and the MSME book, higher NIMs, and an improved cost-to-income ratio helped us to deliver a robust operating performance with the pre-provision operating profit rising by 73% to ? 73.8 crores. Further, the gross and net NPA levels have continued to remain low, and steady vis-à-vis FY19.
Post the announcement of the nation-wide lockdown in March, we had temporarily closed all of our branches and suspended our operations. We gradually re-started our branch operations from May onwards, with the majority of the collection operations resuming post 1st June 2020. As of today, almost all of our branches are fully operational, with a few of them operating from different locations as they were originally located in containment zones. In-line with the broader microfinance industry, and as advised by SRO bodies like MFIN and Sa-Dhan, we extended moratorium to all our MFI and MSME customers for the months of April & May 2020. Meanwhile, in the 2W segment, we continued to accept collections in April & May, granting a moratorium to only the customers that specifically requested for it.
We have resumed our MFI and MSME collections from 1st June onwards, and so far, we have received very encouraging response as a majority of our customers have repaid their dues for the month of June and have not requested for any further moratorium. In the 2-wheeler segment, collections in June have seen a material improvement compared to April & May. It is a positive sign that a majority of our customers are willing to repay even though the RBI has extended the moratorium until 31st August. As the bulk of our MFI & MSME customers are based in rural India (>85% of AUM) and engaged in essential activities they are relatively less impacted. Moreover, the various economic relief measures announced by the Government for the bottom-of-the-pyramid is also expected to support quicker on-ground recovery. Repayment rates for June 2020 dues are expected to close at ~59% for the MFI segment; 84% for the MSME segment; and 85% for the 2-wheeler segment. The remaining customers remain under moratorium, though most have expressed a desire to resume repayments in 1 or 2 months and are not expected to use the full moratorium tenor available until August 31, 2020.
While it is difficult to predict the trajectory that the COVID-19 pandemic will take in the coming months and the year, as things stand today operationally speaking, we feel that the worst is behind us and in the next few months we will be focused on getting the repayment rates back to a semblance of normalcy, towards which we have made significant strides in the Month of June 2020. Going forward, we expect our collection efficiency to improve substantially over the next 2-3 months as the unlocking of economy gains pace and the RBI mandated moratorium ends in August 2020. Our primary focus will be on protecting our asset quality & improving collections from the field, maintaining a healthy liquidity position, and keeping our operating costs in check. The situation on the ground will require us to be nimble and constantly adapt to changing circumstances, a difficult task even during normal times, much less a global pandemic.
A special thanks to all the stakeholders of Arman, especially the employees who many times went above and beyond the call of duty to ensure the best interests of the company, and many who had to 're-learn' and 'un-learn' their jobs to adapt to the changing ground situations. Our mostly rural customers remain resilient as ever and will need credit in the coming months and years to rebuild their businesses; to that end, our mission to help the bottom of the pyramid becomes more critical than before. On the whole, we remain confident of overcoming these near-term challenges, and getting back on our growth trajectory as the conditions gradually normalize. We thank everyone for their outpouring of wishes and encouragement during the exceedingly difficult past few months. Together, we will persevere, and come out stronger and more resilient than ever before."
Segmental Performance Update - Q4 & FY2020 v/s. Q4 & FY2019
Microfinance - Financial Highlights
Two-Wheeler & MSME - Financial Highlights
About Arman Financial Service Limited
Arman Financial Services Ltd (BSE: 531179) is a category 'A' Non-Banking Finance Company (NBFC) active in the 2-Wheeler, MSME, and Microfinance Lending business. The Microfinance division is operated through its wholly-owned subsidiary, Namra Finance Ltd, an NBFC-MFI. The group operates mostly in unorganized and underserviced segment of the economy and mostly serves niche rural markets in Gujarat, Madhya Pradesh, Uttar Pradesh, Maharashtra, Uttarakhand, and Rajasthan through its network of 211 branches and 70+ dealer touchpoints.
Arman's big differentiator from a Bank and other NBFCs is the last mile credit delivery system. They serve areas and clients where it is simply not possible for banks to provide financial services under the current market scenario. For more information, please visit our web site www.armanindia.com.
For more information, contact:
Mandar Kapse, Investor Relations