Better debt ratings, according to Chairman HP Singh, may enable Satin Creditcare to lower funding costs in Q4FY24

Better debt ratings, according to Chairman HP Singh, may enable Satin Creditcare to lower funding costs in Q4FY24

According to Singh, disbursements would increase by 43–44 percent in Q4FY24.

Creditcare Network Limited - HP Singh Satin

Due to an improvement in its long-term debt rating in December, microfinance business Satin Creditcare Networks is expected to experience a drop in its cost of funds of up to 20 basis points (bps) in the January-March quarter, Chairman and Managing Director (CMD) HP Singh said in an interview with Moneycontrol.

Because on profitability indicators, rating agency ICRA raised the company's long-term debt rating from 'A-' to 'A' in December. "If it declines, it may drop as low as 11.25 percent and as high as 11 percent. According to what I gather, it will stay steady at 11.25%, Singh said in an interview.

During the October-December quarter, the company's cost of capital ranged from 11.23 to 11.50 percent; Singh anticipates that this will drop to a maximum of 11 percent in the next quarter. According to him, the end users would profit from the lower funding costs.

We will surely pass on the savings to the final consumers whenever the cost of money decreases. We will pass it along as long as our net interest margin (NIM) remains secure.

raise money

In the first nine months of the current fiscal year, the firm raised over Rs 7,470 crore, a 56% increase YoY. The business had raised Rs 4,799 crore over the same time the previous year.

NIM was 13.60 percent in the third quarter (Q3) of the fiscal year 2023–24 (FY24), down from 14.09 percent in the same period the previous year. However, it is more quarterly in nature. Singh said, "We anticipate NIM to stay steady at 13 percent in the upcoming quarter."

According to Singh, the fourth quarter of the fiscal year 2024 would probably see a 43–44 percent rise in payments. "So far, we have expanded by around 40% overall. We will expand by around 43–44 percent by the end of the year, in my opinion," Singh said.

Consolidated firm expenditures climbed by 41% year over year to Rs 7,445 crore in Q3FY24. Satin Holdings MFI Company disbursed Rs 6,881 crore, Satin Finserv Ltd disbursed Rs 321 crore, as well as Satin Housing Finance disbursed Rs 244 crore of the total payout.

Similarly, to reach Rs 11,074 crore, the lender's consolidated assets under management (AUM) increased by 39% year over year. Satin Holdings MFI Company, valued at Rs 9,811 crore, is the largest AUM share of this, accompanied by Satin Finserv and Satin Housing Finance, estimated at Rs 657 crore and Rs 607 crore, respectively.

From Rs 55 crore in the same time last year to Rs 108 crore in the October-December quarter, Satin Creditcare Network's net profit more than quadrupled. Low loan costs and robust corporate development were the driving forces behind this.

The overall portfolio of the lender increased by 44.3% year over year to Rs 9,811 crore. By the end of December, its gross non-performing assets (NPA) ratio had dropped from 3.92 percent to 2.4 percent from the previous year. As of December 31, 2023, the business has Rs 146 crore in on-book provisions, or 2% of the on-book portfolio. The Reserve Bank of India (RBI) states that a provision of Rs 117 crore is necessary.