Tag: muthoot finance

Muthoot Finance expects gold loan business to drive bottom line in Q2

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The Kerala-based finance company, which also operates a home loan, micro-finance and insurance broking subsidiaries said the company is going slow on non-gold business and the share of gold loan profit in the consolidated profit for the first quarter has increased to 99%

NBFC Muthoot Finance expects gold loan business to drive its bottom-line in the second quarter while demand for vehicle finance and home loan division is expected to remain muted for another quarter.

The Kerala-based finance company, which also operates a home loan, micro-finance and insurance broking subsidiaries said the company is going slow on non-gold business and the share of gold loan profit in the consolidated profit for the first quarter has increased to 99%

“We should be seeing growth in the non-gold business only from the third quarter. Vehicle finance and home loan sector has not picked up so far and is still in difficulty,” George Alexander Muthoot, managing director, Muthoot finance, said.

He added that the NBFC consciously decided to go slow in terms of non-gold lending business on account of continued uncertainty and emerging uncertain credit behaviour. The net profit of the gold loan division increased 16 % year on year to Rs 971 crore in Q1 of FY22 while it declined 3% quarter on quarter from Rs 996 crore in Q4 FY21. On a sequential basis, the loan assets under management of the Kerala-based lender decreased Rs 145 crore in Q1 as the company decided to go slow on non-gold business.

Gross loan assets under management for Q1 stands at Rs 52613.8 crore, with gold loans assets under management seen at Rs 52068.6 crore and non-gold AUM at Rs 545.2 crore. George Muthoot told FE that gold loan business picked up in July and August after remaining sluggish due to Covid-related restrictions in April-June period.

“With shops and small businesses opening up, demand for gold loan will pick up. We will do well in the remaining three quarters and achieve the guidance of 15% easily,”he added. Regarding the cost of funds, he added that it has stabilised and unlikely to come down further. Incremental cost of funds for the NBFC stands at 8.15%.

Bad debts written off by the lender in the first quarter stands at Rs 9.1 crore, which is seen as 0.02% of the total gross loan assets.

The lender also added 50,000 new customers in the first quarter and plans to add 100 branches in the fiscal year.

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Muthoot Finance reports 14% rise in Q1 consolidated net

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The loan assets under management fell by Rs 145 crore q-o-q as the company decided to go slow on non-gold business.

NBFC Muthoot Finance on Friday reported a 14% year-on-year (y-o-y) increase in its first quarter consolidated net profit to Rs 979 crore, largely due to good performance of the gold loan division. Consolidated loan assets under management increased 25% y-o-y to Rs 58,135 crore against Rs 46,501 crore in the year-ago period.

The company, which also operates a home loan, microfinance and insurance broking subsidiaries, said the net profit of the gold loan division increased 16% y-o-y to Rs 971 crore, and the share in the consolidated profit increased to 99%.

On a sequential basis, the total income of the gold loan division decreased by 4% to Rs 2,715 crore and the net profit declined by 3% quarter-on-quarter from Rs 996 crore reported in Q4 FY21. The loan assets under management fell by Rs 145 crore q-o-q as the company decided to go slow on non-gold business.

George Alexander Muthoot, MD, said: “We consciously decided to go slow in terms of non-gold lending business on account of continued uncertainty and emerging uncertain credit behaviour. We are redrawing our strategies in terms of non-gold lending business and we are confident to emerge stronger as environment improves. On the gold loan front, we are targeting 15% growth in the remaining three quarters.”

Loan assets of the gold loan division for the quarter stood at Rs 52,614 crore, compared to Rs 41,296 crore in the year-ago period, growing 27%.

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Muthoot Finance Q4 net rises 22% to Rs 1,024 cr

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Loan assets stood at Rs 52,622 crore as on March 31, 2021, as against Rs 41,611 crore in the year-ago period. During the quarter, gold loan assets increased by Rs 2,304 crore.

NBFC Muthoot Finance on Wednesday reported a 22.5% year-on-year (y-o-y) increase in its fourth quarter consolidated net profit to Rs 1,023.76 crore, largely due to good performance of the gold loan division.

The company, which also operates home loan, microfinance and insurance broking subsidiaries, said the net profit of the gold loan division rose 24% y-o-y, while net profit of the non-gold subsidiaries declined 32% to Rs 119 crore from Rs 176 crore in the year-ago period.

Gold loans under management reported a quarter-on-quarter growth of 5% during Q4, while other loans declined by almost 9%.

The Kerala-based lender said its consolidated loan assets under management increased 24% year-on-year to touch Rs 58,280 crore in Q4.

For the entire FY21, the NBFC reported a 21% y-o-y increase in its net profit to Rs 3,818.87 crore.

The standalone net profit of Muthoot Finance increased 22% y-o-y to touch Rs 995.66 crore in Q4. For the entire FY21, it reported a net profit of Rs 3,722.17 crore, an increase of 23% compared to Rs 3,018 crore in FY20.

Loan assets stood at Rs 52,622 crore as on March 31, 2021, as against Rs 41,611 crore in the year-ago period. During the quarter, gold loan assets increased by Rs 2,304 crore.

George Alexander Muthoot, managing director, said, “During the quarter, we disbursed fresh loans to 3.61 lakh new customers amounting to Rs 2,753 crore and to 4.32 lakh inactive customers amounting to Rs 2,917 crore.”

The long-term credit ratings of Muthoot was upgraded to ‘AA+’ by CRISIL and ICRA .

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Muthoot Finance ties up with NIRA to offer personal loans

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Muthoot Finance Limited has announced its collaboration with fintech NIRA as part of its strategy to strengthen its digital footprint.

Through this partnership, salaried customers can avail a personal loan of up to ₹1 lakh from Muthoot by downloading the NIRA app from Google’s Play store.

NIRA is a Bengaluru-based fintech offering small ticket personal loans to salaried workers from India’s middle class. They offer loans to borrowers starting at incomes as low as ₹12,000 per month. This partnership will help Muthoot Finance build its unsecured lending book.

Pradeep, Head – Personal Loan, Muthoot Finance said, “We are excited to have this tie-up to enhance our personal loan growth with quality. Muthoot Finance is also aggressively moving towards an end-to-end digital process, and this tie-up is one of the initiatives in the same direction.”

Rohit Sen, CEO and co-founder at NIRA, said: “Muthoot is a trusted brand Pan-India, and trust is a vital ingredient in the provision of financial services. This partnership bolsters our ability to continue our mission of providing accessible formal credit at affordable rates and in a timely manner to India’s mass market.”

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Sensex and Nifty ends flat amidst high volitality, financials underperform, BFSI News, ET BFSI

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Domestic equity market benchmarks BSE Sensex and Nifty 50 traded flat on Friday. Benchmark indices erased most of the intraday gains and ended on flat note on April 16 amid high volatility. At close, the Sensex was up 0.06% at 48,832.03, and the Nifty was up 0.25% at 14,617.90.

Except financials all other sectoral indices ended in the green. ICICI Bank, SBI Bank, Bajaj Finance were among top index laggards.BSE Midcap and Smallcap indices outperformed broader indices today as recent fall in the space made investors to do bargain trading in quality midcap and small cap space.

The Nifty Bank Index ended flat at 31,977 down by 0.42%. Amongst the biggest losers were- ICICI Bank at Rs 566 (-1.43%) followed by Bandhan Bank at Rs 322 (-1.09%), RBL Bank at Rs 187 (-1.03%), SBI at Rs 339 (-0.82%), Kotak Mahindra at Rs 1,764 (-0.54%). Amongst biggest gainers were IDFC First Bank at Rs 54 (2.29%) followed by AU Small Finance Bank at Rs 1,077 (2.05%), Induslnd Bank at Rs 862 (0.54%).

Nifty Financial Services ended also flat at 15,362 losing 0.16%. Amongst the biggest losers were – Bajaj Finance at Rs 4,616 (-0.94%) followed by REC at Rs 127 (-0.78%), Power finance at Rs 109 (-0.32%). List of gainers included- Muthoot Finance at Rs 1,168 (1.31%) followed by HDFC at Rs 2,574 ( 1.06%), Chola Invest at Rs 540 (0.99%), Bajaj Finserv at Rs 9,824 (0.87%).

Other key takeaways

Gold prices recover in India, back above Rs 47,000
Gold prices recovered in Indian markets on Friday, after closing above Rs 47,000 per 10 gram for the first time since February 23, 2021, in the previous session. Although MCX gold June futures were trading weak, down Rs 85 or 0.18 per cent at Rs 47,090 per 10 grams, against the previous close of Rs 47,175.

MCX silver was trading at Rs 68,407 per kg, down Rs 169 or 0.25 per cent, as compared to a previous close of Rs 68,540 per kg. On April 13, MCX gold hit Rs 47,000 mark in intraday after nearly two months. Last year in August, MCX gold touched a record high of Rs 56,191 per 10 grams.

Rupee Close
Indian rupee extended the early gains and ended near the day’s high at 74.35 per dollar, amid buying saw in the domestic equity market. It opened higher by 13 paise at 74.79 per dollar against Thursday’s close of 74.92 and traded in the range of 74.28-74.79.

Rising domestic cases above 2-lac per day, widening India’s trade deficit, and the recent rebound in the crude oil could be a headwind for the Rupee. Overall, the short-term range for the USDINR is likely to be from 74.20-75.50.

Dow closes above 34,000 for first time
The Dow industrials closed above 34,000 for the first time on Thursday as the blue-chip benchmark and S&P 500 posted fresh record highs on a tech stock rally fueled by falling bond yields and strong March US retail sales, according to Reuters. The Dow Jones Industrial Average 0.9 per cent, the S&P 500 gained 1.11 per cent, and the Nasdaq Composite added 1.31 per cent.



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ICRA upgrades long-term debt rating of Muthoot Finance to AA+

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ICRA has upgraded its ratings on the long-term debt facilities of Muthoot Finance Limited to ‘[ICRA] AA+(Stable)’ from ‘[ICRA]AA(Stable)’.

The rating upgrade signifies reaching the highest standing in the category and this rating is just one level below ‘AAA’ rating, which is the highest rating for long term debt instruments. The rating denotes ‘high safety’ regarding timely servicing of financial obligations, and such instruments carry very low credit risk.

This rating upgrade will enable the company to raise more long term debt funds and attract a wider set of investors. This upgrade can further attract retail investors’ investments in the public issue of NCDs in which the company has a track record of 24 issuances raising ₹17,392 crore cumulatively. Moreover, the company will be able to raise funds at much more competitive rates.

George Alexander Muthoot, Managing Director, said “With this rating upgrade from ICRA, Muthoot Finance Ltd has crossed a major milestone of AA+ credit rating from two rating agencies, earlier being from CRISIL. It is a recognition of its market leadership position in the gold loan industry as well as its robust financial standing. We wish to highlight that the achievement of this rating level for Muthoot Finance Ltd is on a standalone basis without any parental support factored in this rating. We continue steadfast in the mission of making Indians Atmanirbhar and supporting the financial needs of every individual as well as MSMEs.”

ICRA, in its rating rationale, has stated that “The rating upgrade factors in the sustained healthy financial performance of Muthoot Finance Limited along with the scale-up in the overall portfolio which was largely led by the gold loans business. MFL’s gold loan book has more than doubled over the last five years to ₹49,622 crore as of December 2020 and accounted for about 90 per cent of its overall consolidated portfolio. The credit costs in the gold loan business have been under control, which uplifts the consolidated earnings performance. ICRA expects the consolidated earnings performance to remain healthy as gold loans would account for about 85-90 per cent of the overall lending portfolio. MFL’s capitalisation profile characterised by a consolidated managed gearing of about 3.5 times as of December 2020 is also expected to remain comfortable over the medium-term supported by its expected healthy accruals.”

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Muthoot Homefin aims to disburse ₹700 crore of home loans in FY22

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Muthoot Homefin (India) Ltd, a wholly owned subsidiary of Muthoot Finance, is aiming to disburse ₹700 crore of home loans in FY2021-22.

“We are steadfastly progressing on taking the ‘Housing for All’ initiative of the government to the farthest Tier II and III locations in the country in order to support the affordable housing needs and aspirations of every Indian. As of now, we will be focussing on expanding our housing finance operations in the Southern States of the country. With the additional focus towards collections in FY2020-21, the company has been able to contain delinquencies on the portfolio during the pandemic and have now stabilised its collections,” said George Alexander Muthoot, Managing Director.

“With the recent credit rating upgrade of Muthoot Homefin to AA+ (stable) by CRISIL, we will be able to raise funds even more competitively and pass on the benefits to end-customers so that each Indian can own their dream home,” he added.

MHIL started its operations in 2016 as an Affordable Housing Finance Company catering to the needs of aspiring Indian home-owners. It is registered as a Housing Finance Company (HFC) with the National Housing Bank (NHB).

It has disbursed over ₹2,600 crore home loans since its inception. Currently, it has an AUM (assets under management) of ₹1,800 crore with operations in 16 States and Union Territories, serving more than 22,000 customers.

MHIL has transferred over ₹300 crore of loan subsidy under Pradhan Mantri Awas Yojana’s Credit Linked Subsidy Scheme from NHB. Muthoot Homefin has also received ₹225 crore of refinance from NHB, he added.

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CRISIL upgrades rating of Muthoot Finance’s long-term debt facilities to AA+

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CRISIL Ratings has upgraded its ratings on the long-term debt facilities of Muthoot Finance to ‘CRISIL AA+/Stable’ from ‘CRISIL AA/Positive’.

CRISIL Ratings, in its rating rationale, has stated: “The upgrade is driven by Muthoot Finance’s demonstrated ability to profitably scale up its core gold loan business while maintaining its strong financial risk profile.” It added that an “established track record and brand name in gold financing industry, strong capitalisation and profitability among the best in the industry, which is expected to remain healthy, are the strengths of Muthoot Finance Ltd.”

The AA+ rating is just one level below ‘AAA’ rating, which is the highest rating for long-term debt instruments. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

The rating upgrade will enable the company to raise more long-term debt funds as well as attract a wider set of investors. It can further attract investments from retail investors in the public issue of non-convertible debentures (NCDs) in which the company has a track record of 24 issuances raising ₹17,392 crore cumulatively. Moreover, the company will be able to raise funds at much more competitive rates.

George Alexander Muthoot, Managing Director, said: “This is another golden feather in the cap for Muthoot Finance, and it is a recognition of its leading and long-sustained track record in gold loan business. With this rating upgrade, Muthoot Finance has become one of the few NBFCs that has achieved this rating level on a standalone basis without any parental support factored in rating.”

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Muthoot Finance Q3 net rises 17% yoy on robust gold loan portfolio growth

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Muthoot Finance on Tuesday reported a consolidated net profit of Rs 1,006.6 crore in the third quarter.

NBFC Muthoot Finance on Tuesday reported a 17% year-on-year increase in its third quarter consolidated net profits to Rs 1006.6 crore with its gold loan portfolio growing robustly.

The Kerala-based lender said its consolidated loan assets under management (AUM) increased 28 % year on year to touch Rs55,800 crore during the quarter.

The finance company, which also operates home loan, microfinance and insurance broking subsidiaries, said net profit of the gold loan division, Muthoot Finance (MFIN), increased 22 % YoY to touch Rs 991 crore.

Managing director George Alexander Muthoot said, “We had a remarkable third quarter with several achievements. Our standalone loan assets of Muthoot Finance have crossed the landmark of Rs 50,000 crore. Our active customers presently having a loan account also crossed the landmark of 50 lakh. We have achieved 22% growth in gold loan portfolio during the nine months of the current year and likely to end the year with at least 25% growth as against previous year growth of 22%.”

“During the quarter, gold loan portfolio of Muthoot Finance increased by Rs 3,389 crore to Rs 49,622 crore, quarter-to- quarter growth of 7%. Our disbursements for the quarter were focused on new customer additions, fresh loans to active and inactive customers and top-up loans to existing customers. We disbursed fresh loans to 3.88 lakh new customers amounting to Rs 2,976 crore and to 4.38 lakh inactive customers amounting to Rs 2,960 crore,” he added.

Subsidiaries followed a cautious approach towards lending. Share of the subsidiaries constitutes 10% of the consolidated loan portfolio.

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Demand for gold loan surging: Muthoot Finance

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Muthoot said its gold loan business is likely to grow by more than 15% in the next three years.

NBFC Muthoot Finance said the demand for gold loan is consistently rising. Managing director George Alexander Muthoot told FE the company is adding new customers to its gold loan business on a daily basis with small businesses and traders preferring it for a quick loan.

“We have a customer base of 2-3 crore, and at this point of time, we have more than 60 lakh active loan accounts. The number of people taking a loan on any day is more than the number of people closing a loan account. The number of active customers has been increasing for the last three-four months. Our quick loans are helping many to restart their businesses,” he said.

Muthoot said its gold loan business is likely to grow by more than 15% in the next three years.

He said raising capital for business expansion has become easy and the incremental borrowing rates are seen coming down. The average yield of the NBFC is 19% and it is likely to fall with the cost of funds coming down.

Muthoot exited its white label ATM business in December 2020 as the venture was not making money. He said digital transactions are increasing and more than 60% of customers do some digital transactions.

The company, which also operates home loan, microfinance and insurance broking subsidiaries, has plans to open 150-200 branches a year, adding to its existing 5,330 branches.

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