Gold loan NBFC Muthoot Finance announced a 21% drop in net profit for the first quarter of the current fiscal on lower interest income. Net interest income slipped to R554.3 crore from R591 crore year-on-year. The Kerala-based NBFC, which is the largest gold financing company in India, also reported a decline in assets under management to R25,840 crore from R26,000 crore in the preceding quarter. Sequentially, the net profit has dropped by 12% to R194 crore and total income declined to R1,286 crore from R1,411 crore.
“We have to say that in spite of a 2 % drop in the assets under management, the gold holding in our hands has gone up from 134 tonne to 137 tonne. Loan accounts increased from 63 lakh to 65 lakh during the period. This shows more people are coming forward with more gold to take loans and demand continues to be robust,” said George Alexander Muthoot, the managing director.
Stagnation in loan growth, expenses of new branches and lower yield on liquidated loan accounts was the major reason for the decline in profits, he added. The company expects a flat growth in the current fiscal with an upside of only 10% in the best scenario.
Company officials said they are hopeful of getting licence as more than 60% or 2,300 of the branches are in rural or semi-rural centres.