Finance company Arman Financial Services announced Q4FY25 & FY25 results Q4FY25 Financial Highlights: Disbursements for Q4FY25 stood at ~Rs 544 crore PPoP for Q4FY25 grew by 15% year-on-year to ~Rs 102 crore. Gross Total Income stood at Rs 199 crore for Q4FY25 compared to Rs 182 crore for Q4FY24 PAT stood at Rs 12.8 crore for Q4FY25 compared to Rs 50.8 crore for Q4FY24 FY25 Financial Highlights: Consolidated disbursements for FY25 stood at ~Rs 1,713 crore, as compared to ~Rs 2,297 crore, Net total income for FY25 amounted to ~Rs 491 crore, registering a 24% year-on-year growth. Pre-Provision Operating Profit (PPoP) for FY25 registered a 14% year-on-year growth to ~Rs 333 crore. Shareholders' Equity as of March 31, 2025, stood at ~Rs 874 crore Total borrowings stood at ~Rs 1,759 crore (Including off balance sheet direct assignment (DA) liability) Additionally, the company has Rs 212.4 crore undrawn sanctions from existing lenders GNPA stood at 3.37%; NNPA stood at 0.55% Commenting on the Company’s performance, Jayendra Patel, Vice Chairman & Managing Director, Arman Financial Services said, “The financial results for the quarter and full year ended 31st March 2025 reflect the challenging operating environment that has persisted across the microfinance sector. In FY25, Namra Finance, Arman’s wholly owned MFI subsidiary, reported a net profit of Rs 7.8 crore compared to Rs 138.3 crore in FY24. However, for Q4FY25, Namra reported a net loss of Rs 0.26 crore as compared to a profit of Rs 38.7 crore in Q4FY24. This performance was primarily on account of elevated provisioning requirements driven by continued stress in rural markets. We have been sufficiently diligent to ensure sufficient provisions are in place to reflect the ground realities and have also taken accelerated write-offs. We remain confident in the MFI sector as a whole in the long term. However, until the sector deleverages and adapts to the changing culture of the rural sector, overall growth rate in the MFI segment will not return to normal. Over the years, the company has taken many initiatives to deal with both temporary and permanent changes in the sector. We have always believed in staying agile enough to take advantage of opportunities when they present themselves but also be prudent enough to step back and slow down when the situation demands. Namra Finance AUM declined by 23%, from Rs 2,193.1 crore as on March 31, 2024, to Rs 1,685.8 crore as on March 31, 2025. Overall consolidated AUM declined by 15%, from Rs 2,639.3 crore on March 31, 2024, to Rs 2,245.4 crore as on March 31, 2025. For Namra Finance, quarterly disbursements stood at Rs 393.3 crore, reflecting a year-on-year decline of 26%. For the full year FY25, disbursements stood at Rs 1,231.9 crore compared to Rs 1,895.2 crore in FY24. In FY25, the company has taken two key decisions: completely separating the credit and recovery functions from the branch operations. These decisions are based on data and logic, not emotions. While emotionally, we would like for rural culture to return to what it was; evidence and logic suggest that this is unlikely to happen, at least not fully. Traditionally, microfinance heavily relied on the Joint Liability Group (JLG) model and intertwined its sales, credit, and collection functions. Also, credit decisioning policies were largely population based. However, we believe that the time is ripe for change. This one-size-fits-all approach will have to be supplemented by individual assessment; we must change our systems to be able to evaluate each customer on his or her own individual merits and circumstances. That would require a strong and independent credit culture at the ground level and would require us to completely separate the historical conflict of interest between credit and sales. While this change would lead to higher operating costs, it will help us avoid higher credit costs, something we believe is the better trade-off. Separating collections is also a natural progression; field officers will continue to service regular collections and early delinquencies to preserve the FOcustomer relationship and the essence of the JLG model. Currently, we have implemented the new credit structure in 140 of our 391 branches, with the remaining branches to be implemented by Q2 of FY26. Early indicators in asset quality for loans originated under the new credit structure are encouraging. Additionally, all disbursements in the MFI segment starting from November 2024 are covered under the Credit Guarantee Fund for Micro Units (CGFMU) scheme. As of March 2025, 34% of the MFI AUM is covered under the CGFMU scheme. The company is also in compliance with MFIN Guardrails as of March 31, 2025. We have also successfully completed an ARC transaction in March 2025. Zero-bucket collection efficiency for the quarter stood at 98.5% and improve to 98.8% March 2025 for the MFI book, which is lower than expected but a significant improvement in comparison to Q3FY25. Overall collection efficiency on a consolidated basis stood at 95.3% for the quarter. The standalone segments under Arman, which include lending to MSMEs, Micro LAP, and two-wheeler customers, have shown resilience and delivered a stronger performance during the year. As of 31st March 2025, the standalone AUM stood at Rs 559.6 crore, registering a year-on-year growth of 25%. Disbursements for FY25 stood at Rs 481 crore, reflecting a growth of 20% over FY24. The portfolio continues to demonstrate healthy asset quality, with Gross NPA at 3.38%. This business benefits from a more diversified customer base, relatively lower delinquency levels, and a stable operating environment. Focused execution and prudent underwriting in these segments have helped offset some of the pressures seen in the microfinance business. Our consolidated balance sheet remains strong, supported by a healthy capital adequacy ratio—37.34% for Arman (standalone) and 48.37% for Namra as well as surplus liquidity of Rs 269.1 crore, providing us with the financial resilience to navigate this challenging phase. While the short-term outlook remains cautious, our strategic focus will remain on stabilizing the portfolio, improving operational efficiency, and reinforcing asset quality. We thank all our stakeholders and especially all the employees for the continued support.” Result PDF