Muthoot Microfin Q1 FY26 Income at ₹559 Crore, Profit ₹6.2 Crore

Muthoot Microfin Limited, among India’s leading Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI), focused on providing micro-loans to women entrepreneurs with a focus on rural regions of India, announced its unaudited financial performance for the first quarter of the financial year 2025-26.

Business Highlights: Q1 FY26  

•      GLP stood at Rs. 12,252.8 crore; company disbursed Rs. 1,775.6 crore

•      Borrower base grew by 0.3% YoY from 34.0 lakhs to 34.1 lakhs across 1,726 branches. 

•      Entered Northeast India with the launch of a new branch in Assam 

•      Diversifying portfolio by foraying into secured lending products such as Gold Loans and Micro LAP

•      CRISIL reaffirms rating on long term facilities/NCDs at ‘CRISIL A+/Stable’ and MFI Grading at ‘M1C1’  

Financial Highlights: Q1FY26  

•      Total income for the quarter stood at Rs. 559.1 crore, with Net Interest Margins at 11.5% 

•      CoF at 10.79%, down from 11.02% in Q4 FY25 led by greater PTC utilisation and diversifying funding sources.

•      Pre-provision operating profit (PPOP) stood at Rs. 138.5 crore

•      Maintained a prudent underwriting and provisioning approach, resulting in provisioning cost of 4.3%, with profitability for the quarter at Rs. 6.2 crore. Provision Coverage ratio (Stage III) remains robust at 68.5%

•      The GNPA of the Company is at 4.85% as against GNPA of 2.10% a year ago, NNPA (Net of Stage III provision) stood at 1.58% as against 0.71% last year

•      Strong liquidity position with Rs. 536.5 crore along with DA/PTC sanctions of Rs. 1,002 crore and unutilized term funding sanctions of Rs. 561 crore

•      Healthy capital position with a CRAR of 27.85%

•      23% of our collections are via digital channels such as UPI/Customer App, while 100% disbursements are entirely executed digitally

Commenting on the performance: Mr. Thomas Muthoot, Chairman & Non-Executive Director of Muthoot Microfin, said

“While the microfinance sector continues to navigate a phase of moderated growth, we remain unwavering in our commitment to long-term value creation and sustainable impact.

Over the past few quarters, we have focused on systematically strengthening our organisational foundation—implementing robust internal policies, streamlining critical processes, upgrading core technology systems, and significantly enhancing team capabilities across all levels.

In parallel, we prioritised improving collections, which led to a temporary increase in operating expenses. This strategic investment, while impacting short-term cost metrics, was essential to maintaining asset quality and will yield long-term benefits in portfolio stability and operational efficiency.

Encouragingly, we are now witnessing early positive indicators in our core microfinance business, with the full benefits of our strategic initiatives expected to materialise in the second half of the fiscal year.

Simultaneously, we continue to advance our portfolio diversification strategy through focused expansion into secured lending products, particularly Gold Loans and Micro LAP loans, by leveraging synergies with our group companies via strategic co-lending partnerships.

These forward-looking investments are designed to fortify our business model and drive longterm sustainable growth.”

Mr. Sadaf Sayeed, CEO, Muthoot Microfin, said

“Q1 is traditionally a seasonally soft quarter for the microfinance industry in terms of disbursement growth. The quarter saw a heightened impact driven by ongoing sectoral challenges and the implementation of stricter MFIN guardrails, prompting the industry to shift its focus from aggressive expansion to internal consolidation. Aligned with our long-term strategy of sustainable value creation, Muthoot Microfin adopted a calibrated approach—moderating disbursements and prioritising portfolio quality, while channelling efforts towards strengthening operational infrastructure.

Our disciplined execution yielded encouraging results. The Karnataka portfolio stabilised, with collections showing signs of revival, reflecting the success of our targeted recovery efforts. Tamil Nadu continued to perform well. These outcomes were further supported by improved X-bucket collections, which rose to 99.25% in June—underscoring better borrower behaviour and the impact of our credit discipline.

Further, we have seen a marked improvement in our MMFL+4 lenders exposure, which declined from 8.2% in December 2024 to 4.7% in June 2025. We have started the year on a strong note maintaining credit cost at 4.3%, towards the lower end of our guidance – validating the effectiveness of our risk management framework.

We marked our entry into Northeast India with the launch of a new branch in Assam, expanding our footprint to 21 states and union territories, and reinforcing our commitment to financial inclusion. Additionally, with robust systems and processes in place, we have commenced disbursements in secured lending products, marking a strategic step toward portfolio diversification.

We are comfortable on the liquidity front, supported by a healthy CRAR of 27.85%, which provides ample headroom for future growth and financial stability. Our Q1 initiatives have laid a strong foundation for accelerated performance, and we are operationally well-prepared to execute our growth strategy in the quarters ahead.”

Key Metrics: Q1 FY26