Muthoot Finance confident of achieving 10% business growth in FY23: MD George A Muthoot

Muthoot Finance, which has posted back-to-back decline in profits in the last two quarters, said it is set to make a comeback having discontinued its low-interest schemes.

The country's largest gold loan company in terms of loan portfolio expects a 10 per cent business growth in current fiscal, George Alexander Muthoot, Managing Director, Muthoot Finance, said.

The non-banking finance company (NBFC) posted a decline of 10 per cent in its net profit from a year ago period at Rs 901.60 crore in quarter ended September 2022.

In the preceding quarter ended June 2022, it witnessed a decline of 15.7 per cent in its net profit year on year at Rs 825 crore.

"If you look at quarter-on-quarter, last quarter versus this quarter, there is an increase (of 9.3 per cent) in net profit. If you are comparing last year same quarter, yes I would say there is a 10 per cent decline. This has happened because two quarters back, we had started the low interest scheme as trial basis. We did it for one or two quarters and then we stopped it.

"The impact of that low-interest scheme is what we saw as decline in net profit in last quarter and this quarter also," Muthoot told PTI in an interview.

He said that the impact is running down now as one can see the improvement in profit numbers when compared sequentially.

"I think we are on the improvement track and you should see it (rise in profit) coming back in the next two quarters. We are on track to get there and the guidance for the full year business growth was at 10 per cent and we still continue to hold this guidance," Muthoot said.

The company expects that by the end of the last quarter of this fiscal, it should be able to stage the comeback as one of the main reasons for decline in interest income was due to the low-interest scheme which is disbanded now.

Besides, growth is also impacted because there is a lot of competition in the market not only from the NBFCs but also from the banks, the official said.

"And of course, we are devising ways to get back to growth in the next two quarters."

Company's interest income in July-September period of 2022-23 fiscal fell by 8.2 per cent to Rs 2,757.90 crore, as against Rs 3,003.30 crore in the same period of 2021-22.

In June 2022 quarter, there was a decline of 6.4 per cent in interest income at Rs 2,730.10 crore.

The company, founded by late M George Muthoot in 1939, diversified into other financing businesses over the years.

It has presence in affordable housing finance, microfinance, vehicle finance and insurance broking. It also runs diversified loan business in Sri Lanka through a subsidiary.

Demand in other verticals is seen rising as the economy has opened up fully, Muthoot said.

The mircofinance business has done actually very well. Also, the home finance portfolio has stabilised and it has not de-grown.

"Our vehicle finance and personal loan portfolio and other businesses have also started growing. But the proportion is very low at less than 10 per cent. But then, it is also starting to grow.

Now people have options for other loans such as home, personal and vehicle etc," Muthoot added.

For the last few quarters, the economy has started to do better. Nothing is closed now whether is it hospitality sector, education, cinema or any other, the economic activity is coming up better.

"So demand is coming up. And I think...There is more purchasing power in the hands of people," he added.

Going forward, there will be more thrust on the housing finance sector as decided in the board meeting, the official said, adding, the company is firming up some plans to improve and increase the housing finance business.

On company's fundraising plans, Muthoot said Rs 300 crore has just been raised by issuing bonds (non-convertible debentures).

"In the next month also, we are planning to raise another Rs 300 crore through retail NCDs," said the company managing director.

As on September 30, 2022, company's gross loan assets under management (AUM) stood at Rs 57,230.30 crore as against Rs 55,146.80 crore in the year-ago period.

Of this, gold loan AUM stood at Rs 56,501.40 crore as against Rs 54,682.10 crore a year ago.

The amount of gold jewellery kept as security with Muthoot Finance at end of September 2022 stood at 177 tonnes.

Spread across 29 states and Union Territories, the company has over 4,600 pan-India branches catering to over 2 lakh customers every day. The company's market capitalisation as of September 30, 2022 stood at Rs 41,751.40 crore.

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