What happened in Q2? Clearly there was some pressure that I can see from the numbers. What is the story and what are the reasons behind it?
The second wave came in May, June and July in the eastern region and that was more severe than the first wave and even in the rural areas. So the second quarter was hit as far as collection and credit growth is concerned. Normally credit growth starts before the Puja holidays but compared to the first quarter, the second quarter saw very good collections which improved 19% from June. The customer is coming back.
If I go to another indicator — the 30 DPD — has come down 50% in this quarter compared to the first quarter and the SMA 1 has come down by 25% and SMA 2 is flat. That means the customer is coming back to regularise.
Another indicator was that in the first quarter, 9% of customers were not paying back the micro credit loans, which came down to 4% in the second quarter. The partial instalment paying customer has come down from 29% to 17% while the full instalment paying customer has come up from 62% to 79%. All these three parameters have given good comfort from the customer perspective. They are going back to business and credit demand has come in and credit queries have started. Focus for the next two quarters will be business and profit growth.
There has been sequential improvement in the credit quality as well as growth. But what about asset quality?
I mentioned a couple of things on that. The asset quality has gradually improved. In October, it has been improving in the same line of September. We are hopeful that in a couple of months, it will come back to pre-Covid level. But the credit growth part is always in one month before puja. It has already started and queries are being received from customers
Will the profits numbers start improving from here in terms of trajectory?
Yes. The worst is over now.
