Gold loan NBFC Muthoot Finance reported a 19% y-o-y fall in the net profit at Rs 171 crore for the quarter ended September. The net profit fell 5% sequentially from Rs 180 crore reported in the first quarter.
For the first half of the current financial year, the company’s net profit stood at Rs 351 crore against Rs 405 crore in the same period last year.
The loan book for the second quarter stood at Rs 21,697 crore against Rs 21,305 crore in the first quarter. The net interest income fell to Rs 550 crore against Rs 591 crore last fiscal.
George Alexander Muthoot, the managing director of the company, said the worst is behind. He also expects profitability to improve along with the increase in the loan portfolio. “This quarter we could reverse the degrowth trend that prevailed in the last three quarters in loan portfolio and achieved a net growth of Rs 338 crore. In the quarter we saw the lowest level of loan portfolio of Rs 21,283 crore. We expect growth momentum to continue with increased customer footfalls,” he added.
Gold loan companies are experiencing slower growth compared with 25-30 % CAGR they clocked before March 2012 when RBI March ordered the industry to cap loans at 60 % of the value of their gold collateral sensing risk on a market downslide.
Muthoot Finance recently bought majority stake in a Sri Lanka-based finance company involved in hire purchase, retail finance and business loans. The company is also in the process of setting up White label Automated Teller Machines (ATMs) and plans to install about 100 machines in the current fiscal. Muthoot group, the parent company is planning to enter the insurance and housing loan sector by setting up separate subsidiaries.