Collections ex arrears at ~95.5% raises concern over credit cost trajectory in near term; however, NIM expansion and controlled opex enable RoE to sustain >20% in past 6 quarters
Fusion Microfinance (Fusion) has sustained its strong financial performance in Q2FY24, as reflected in it sustaining ~5% RoA and >20% RoE during the past six quarters with AUM crossing INR 100bn mark. However, collection efficiency (ex arrears) at ~95.5% is one of the lowest within the MFI space and management attributes lower collections to some challenges it has faced in states like Punjab, Haryana, Rajasthan and Gujarat.