Despite a robust growth in disbursements, Magma Fincorp Ltd posted about 19 per cent drop in net profit at Rs 21 crore for the quarter ended September 30, 2011, against Rs 26 crore during the corresponding period last year.

Magma shares fell by 1.26 per cent to close at Rs 66.50 on the BSE on Monday.

“We had earned Rs 57 crore through the securitisation route during the second quarter of 2010.

“This year, however, we have taken a conscious decision not to use that route and use securitisation as primarily a treasury tool.

“So the net profit during this quarter looks marginally subdued compared with the same period last year,” said Mr V. Lakshmi Narasimhan, Chief Financial Officer, Magma.

Accounting policy

The change in accounting policy in tune with international financial reporting standards would have a near term impact on the company's profits, however, things should stabilise by the fourth quarter of this fiscal or by early next fiscal, he pointed out.

Disbursements grew by 37 per cent to Rs 1,558 crore while revenue increased by 27 per cent to Rs 252 crore.

The net interest margin was 4.4 per cent, according to a company statement.

The total assets under management as on September 30, 2011, were Rs 11,378 crore (Rs 9,688 crore).

Commenting on the company's performance, Mr Sanjay Chamria, Vice-Chairman and Managing director, Magma, said:

“Despite a slowdown in the industry, rise in fuel costs and repeated interest rate hikes by the central bank, we have been able to grow our loan book.”

The share of high yield products in the overall disbursement increased to 23 per cent (18 per cent).

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