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Muthoot Finance expects gold AUM growth to be at 15% for FY20, says MD

Thu Nov 14 2019


Muthoot Finance on Wednesday reported a 76.4 percent jump in consolidated net profit at Rs 908.54 crore for the second quarter ended September 30 of this fiscal. The company's net profit stood at Rs 515.06 crore in July-September period last year. George Alexander Muthoot, the managing director of the company, in an interview with CNBC-TV18 spoke the result and outlook for the future.


He said: “I have been trying my best to have a separate classification for gold loan non-banking financial companies (NBFCs) because gold loan NBFCs do not have the two big issues which many other companies or NBFCs have. One, for us there is no NPA [non-performing asset]. We never had NPA problem. Second, we also do not have any asset liability management (ALM) issues because our loans’ average period is only 3-4 months.


“Unfortunately, we are also clubbed with all the other NBFCs. So when banks etc., have a limit or a quota for NBFCs it gets exhausted elsewhere and finally we are also saddled with others that’s why funding problem has happened. Now we are trying to get out of it. We have done one private placement issue and collected Rs 460 crore last month.”


On home finance, Muthoot said: “We have tapered down our projections for the home finance because we were planning to reach about Rs 2,700-3,000 crore of AUM [assets under management] by the end of the year. As of date we have Rs 2,000 crore probably by the end of the year we would reach only about Rs 2,300 crore or so.


“We have scaled down the growth projections there mainly because customers get exposed to builders who are unable to complete the flats. So today we are looking only at 85-90 percent completed flats. Our portfolio is home finance is only affordable house, we do not give any funding for builders, we do not have any funding for anything else; just plain Rs 10 lakh average is what we do,” added Muthoot.


On the margin front, he said, “We have increased interest rates, so that should continue but this quarter the margins were little higher because of the old loans, the NPA loans of the last quarter being redeemed and full interest getting collected because even this quarter our auctions are also very little; we did not have to auction because customers were willing to take back the gold because of the gold price rise. So we have benefited from that this quarter.

“So small interest margin, we may not have next quarter but definitely we will have good margins or continue to have 11-12 percent in the full year,” Muthoot added.



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