Will exceed guidance of 15% growth in FY21: Muthoot Finance

NBFC Muthoot Finance is confident of exceeding its guidance of 15% growth for the current fiscal year with demand for gold loan appearing to be robust.

Muthoot Finance managing director George Alexander Muthoot told FE that business had achieved the pre-Covid level.

“First quarter business was not good, but the second quarter business is extremely good for gold loans. Last year, our total business grew by 22% and this year we will grow more than 15 %,” he added.

The gold loan company with more than four thousand branches was closed till April 23 due to the Covid-induced nationwide lockdown.

“Demand for credit is good because people are thinking of re-starting business. Gold loan is easy and quick funding for small traders and MSME .In the long-run they manage to get other loans from the banks. Our average ticket size of gold loan has also increased from Rs 35,000 to Rs 48,000 because gold prices have gone up,” he said.

Regarding the new policy on on-tap targeted long-term repo operations (TLTRO), Muthoot said the cost of borrowing could come down for the NBFCs and benefits could be passed down to customers in the form of lower interest rates.

“For Muthoot Finance, it may not help much as we are getting funds from banks and NCDs. The loan period is only 18 months and we have not used the facility much. Cost of our incremental borrowing has come down by 100-150 bps in the last two months,” he said and added that this would reflect in the NIM in the long-run.

The Kerala-based finance company, which also operates home loan, microfinance and insurance broking subsidiaries, declared a 52 % increase in consolidated net profit at Rs 858 crore in the April-June quarter in the current financial year compared to Rs 563 crore in the first quarter of the last fiscal year.

“The non-gold loan portfolio is unlikely to grow as we are only focusing on collection and not disbursal. The share of gold loan in the total business is likely to grow this fiscal year,” Muthoot said.

“Earlier 20% of the transactions were online and now it has increased to 40%.We have also started the Loan@Home in June to address the safety aspect of the customer during the pandemic and the response is good,” he added.

The NBFC said there was a four-fold jump in quantum of loan disbursals via its digital platforms to the tune of Rs 224 crore in June compared to February.