NBFC Manappuram Finance said on Friday that gold loan portfolio is estimated to grow by 10-15% in the current fiscal despite a slowdown in new customer acquisition.
VP Nandakumar, MD & CEO of the company, said that business is robust in the gold loan sector, but the NBFC would stick to conservative lending and focus on consolidation of the company.
“Overall demand for credit has not reached the pre-Covid state.In our case, existing customers have taken more loans and compensated for the slowdown seen in new customer acquisition. Customers have also leveraged on the higher gold price,” he added.
The Kerala-based lender, which also operates a home loan, microfinance and commercial vehicle leasing subsidiary, has some arrears in the non-gold loan business due to restructuring.
“Around 25 % of the customers in microfinance , housing finance and vehicle leasing business have availed the moratorium. Collections in the microfinance business will cross 85% this month,collections in the vehicle finance division and housing finance is expected to touch 90% this month. We expect some credit loss in the coming quarter in this sector , but we have provided for that ,” he added.
New loan disbursals are lower in the non-gold portfolio and seen around 50% when compared to last year,he said. The company’s non-gold loan businesses now account for a 28-30% share of its consolidated AUM.
“In the first quarter, the overall business environment was severely affected by the lockdown. However, we were able to maintain growth in our core business of gold loans thanks to our digital infrastructure, particularly our robust online gold loan platform. Now we are able to convert 2,000 customers per day onto the digital platform ,” he said.
The share of online business has now grown to 62 % from 45 % in the pre-Covid period.
Regarding the cost of fund ,the average borrowing cost for the stand-alone entity went down marginally by 7 bps during the first quarter to 9.39 % . The company expects that cost of funds is likely to come down further by 10-15 bps in the current quarter.
Average loan-to-value of the gold loan company is seen at 65 % and it holds 69 tonne of gold at the end of the first quarter.
The lender had reported a consolidated net profit of Rs 367.97 crore in its first quarter results, an increase of 38 % over Rs 266.78 crore recorded in the year ago quarter.