Non-banking finance company (NBFC) Muthoot Finance is aiming for a 15% year-on-year (y-o-y) growth in its gold loans assets under management (AUM) in the current financial year, after witnessing a lacklustre H1FY23, managing director George Alexander Muthoot told FE in an interview.“We had a bit of low growth or staggering growth in Q1 and Q2 (of FY23), by end of Q3 we started seeing good business growing up and Q4 also the business is good. We have seen that the economic activity has picked up in India and there is more demand for loans and gold loans and that is translating to a higher growth in gold loan portfolio,” he said.
As of March 31, Muthoot Finance’s gross loans under management stood at Rs 63,209.8 crore, up 9% y-o-y. Of these, gold loans under management stood at `61,875.3 crore, up 8% y-o-y, according to the NBFC’s Q4FY23 investor presentation.“Microfinance loans constitutes about `6,000 crore plus in the overall book today, that I think should grow 25%-30% this year also as microfinance is a very promising sector today. Housing loan today is about `1,200 crore and we are expecting to reach `1,800 to `1,900 crore by the end of the year,” Muthoot said.When asked on the competition for gold loans with banks, the MD said the NBFC is being able to attract new customers, despite banks advertising their gold loan products heavily through their combined network of over 60,000 branches across country.
Muthoot added that with regulator nudging banks to follow 75% loan-to-value (LTV) ratio for gold loans, a certain degree of level-playing field for different set of lenders will been created.“I am sure they (RBI) would have told them (banks) that they should not do more than 75% (LTV ratio). Many branches have stopped doing that but still some branches still continue to do more than 75%. Nonetheless, we are able to grow our business and going forward there would not be any unfair competition from banks, at least we will have a level-playing field. In that case, gold loan business for NBFCs should certainly be looking better,” he said.
Further, while Muthoot Finance has not been able to scout a credible partner for co-lending of gold loans as of now, it may still be a possibility in future. “We were thinking of roping in some smaller NBFCs for gold loan co-lending, but I do not think anything has come up as yet. We do not see any quality gold loan NBFCs worth doing the co-lending as yet, probably we will get somebody going forward,” Muthoot said.
On margins, Muthoot Finance’s interest spread should be flat y-o-y at 10% in FY24, while net interest margin should be between 10%-11% as against 11.38% during Q4FY23, he said, adding that the NBFC will add 150-200 branches in the current fiscal as against 150 branches in FY23.Lastly, Muthoot Finance will continue issuing `200 -300 crore of retail non-convertible debentures (NCDs) every two-three months, which will offer investors between 8%-8.5% interest rate, he said.