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Muthoot Finance Expects Gold Lending Business to Boost Second Quarter Results


“We shouldn’t see growth in the non-gold business until the third quarter. The auto finance and mortgage industry has not recovered so far and is still struggling, ”said George Alexander Muthoot, Managing Director of Muthoot Finance.

NBFC Muthoot Finance expects gold lending business to increase second quarter results, while demand for the vehicle finance and home lending division is expected to remain weak for another quarter.

The Kerala-based finance company, which also operates mortgage lending, microfinance and insurance brokerage subsidiaries, said the company was slowing its non-gold business and the profit share of loans gold in first quarter consolidated profit rose to 99%

“We shouldn’t see growth in the non-gold business until the third quarter. The auto finance and mortgage industry has not recovered so far and is still struggling, ”said George Alexander Muthoot, Managing Director of Muthoot Finance.

He added that the NBFC made a conscious decision to slow down in terms of non-gold lending activity due to the lingering uncertainty and the emergence of uncertain credit behavior. The gold lending division’s net profit increased 16% year-on-year to Rs 971 crore in the first quarter of FY22, while it was down 3% quarter-on-quarter from Rs 996 crore in fourth quarter of FY21. On a sequential basis, the loan assets under management of the Kerala-based lender declined by Rs 145 crore in the first quarter as the company decided to slow down its non-gold business.

Gross loan assets under management for the first quarter stand at Rs 52,613.8 crore, with gold loans under management at Rs 52,068.6 crore and non-gold assets under management at Rs 545.2 crore. George Muthoot told FE gold lending activity resumed in July and August after remaining sluggish due to Covid-related restrictions during the April-June period.

“With the opening of stores and small businesses, the demand for gold loans will increase. We will be successful in the remaining three quarters and easily reach the 15% target,” he added. funds, he added that it has stabilized and is unlikely to decline further.The incremental cost of funds for the NBFC stands at 8.15%.

Bad debts written off by the lender in the first quarter amount to Rs 9.1 crore, which represents 0.02% of the total gross assets of the loan.

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

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