Fusion Finance suffers 4th consecutive quarterly loss at Rs 165 crore

Synopsis

Fusion Finance reported its fourth consecutive quarterly loss, with ₹165 crore net loss in Q4 FY25 due to high bad loan provisions. Gross NPAs rose sharply, while AUM and interest income declined. Borrowing covenant breaches added pressure.

Microfinance company Fusion Finance reported its fourth quarterly loss in a row due to the ongoing severe asset quality stress that the sector is suffering from.

The lender's net loss stood at Rs 165 crore for the fourth quarter of FY25, as compared with a net profit of Rs 133 in the year ago period, owing to higher provisions to cover bad loans. It set aside Rs 255 crore during the quarter as compared with 119 crore earlier.

Pre-provision operating profit for the quarter under review stood 69% lower at Rs 90 crore against Rs 291 crore in the year-ago period.

Net interest margin was at 8.57% as compared with Rs 11.59% over the same period. Its interest income at Rs 4449 crore was 22% lower year-on-year, in line with squeezed business volume.

Fusion had reported a net loss of Rs 36 crore in the first quarter, Rs 305 crore in the second quarter and 719 crore in the third quarter of FY25. Provision was the highest during the third quarter at Rs 572 crore.

Consequently, Fusion's annual net loss stood at Rs 1225 as compared with Rs Rs 505 crore net profit in the preceding fiscal.

The company breached various financial covenants in respect of borrowings amounting to Rs 4763 crore as of March 31, 2025. Therefore, these borrowings become repayable on demand. The company has obtained extension from its lenders for these breaches for borrowings of Rs 4080 crore. It is in discussion with the remaining lenders to obtain similar extensions, the company management said, in a regulatory filing to the stock exchanges.

The company holds cash and cash equivalents and liquid assets aggregating Rs 798 crore.

"The company remains committed to improving recovery efforts at the field level and is confident of achieving better outcomes. Any subsequent recoveries will be recognised as income and credited to the statement of profit and loss in the
period of recovery," managing director Devesh Sachdev said.

The lender's gross non-performing assets ratio stood at 7.92% at the end of March against 2.89% a year back. Gross NPA was at 12.6% at the end of December 2024. The ratio came down sequentially due to accelerated write-off of bad loans to the tune of Rs 405 crore during the quarter.

Fusion's assets under management dipped 22% year-on-year to Rs 8980 crore at the end of FY25 from Rs 11476 crore as its slowed disbursal to prevent further worsening of asset quality.

Its capital adequacy ratio stood at 22.4%, well above the regulatory stipulation.

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