CreditAccess Grameen Q1 Review - Prudent Provisioning Impacted Earnings: ICICI Securities
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ICICI Securities Report
CreditAccess Grameen Ltd.’s Q1 FY22 standalone financial performance must be seen with respect to the management’s precautionary stance, viz. writing-off loans worth Rs 0.5 billion, provisioning ~75% on 90 plus non-paying customer pool of 4%, and still carrying Rs 1.44 billion provision buffer to cushion earnings from any further adverse impact due to Covid-19.
While collections were down in May 2021 and June 2021 at 79% and 84% respectively, it improved sharply in July 2021 crossing 90%.
Disbursements fell 78% QoQ to Rs 10.6 billion during Q1 FY22 due to lockdown, but revived sharply to Rs 12.6 billion in July-21.
While near-term asset quality concerns do persist, we believe CreditAccess Grameen’s precautionary measures in Q1 FY22, strong capital position with capital adequacy ratio at 27%, and adequate liquidity, would ensure return on asset reviving to 3.4% by FY23E.
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