India’s largest gold loan company Muthoot Finance?s net profit in the three months to September 2012 rose 24% year-on-year (y-o-y) to R268 crore. The bottomline was helped by 19% y-o-y rise in income from operations to R1,299 crore. The loan assets under management at the end of the quarter stood at R23,440 crore.
Muthoot?s profit growth has moderated in the last two quarters after Reserve Bank of India (RBI) showed concerns at the scorching pace at which loans-against-gold were growing and capped the loan-to-value (LTV) ratio for non-banking financial companies (NBFCs) at 60%. Prior to that, most NBFCs had been offering LTVs up to 70% of the gold value.
Muthoot had clocked loan growth of over 50% in the FY2011-12. But for FY2012-13, Muthoot expects 0-15% loan growth as it looks to comply with RBI guidelines by limiting its branch expansion and loan disbursement.
?Half year gone by has been extremely challenging for gold loan NBFCs, as a result of the unequal playing ground created on account of the 60% LTV cap made applicable only to NBFCs,? said G George Muthoot, chairman and managing director of the company.
?Also as a result of the negative perception about the sector, while the asset growth decelerated, borrowing cost went up considerably,? he said. Muthoot said loan losses for six months were R3.25 crore or 0.014% of retail loan portfolio. Muthoot also said it has decided to raise the public holding of its shares to 25% from the current 19.88% to satisfy the Securities and Exchange Board of India?s (Sebi) stipulation of a minimum public holding by May 2014.
Oomen Mammen, CFO of Muthoot Finance told FE, ?We are expecting 5-10% growth in portfolio in the current fiscal. In the first quarter, we witnessed negative growth of 6% and a 2% expansion in the second quarter.?
