Muthoot Microfin Cuts Interest Rates After Asset Quality Improves

Muthoot Microfin Ltd. announced a reduction in its interest rates by 35 basis points. This marks the second interest rate cut by the company in 2024, following a previous reduction of 55 bps in January.

With this adjustment, Muthoot Microfin's effective lending rate will decrease from 23.65% to 23.30%.

The decision to lower interest rates is part of Muthoot Microfin's strategic initiative to enhance the accessibility and affordability of financial services for its customers.

In addition to adjusting interest rates, the non-bank financial company reported robust financial performance indicators. As of March 2024, the company's assets under management grew to Rs 12,193 crore from Rs 9,804 crore in March 2023, demonstrating significant growth.

The asset quality also improved, with gross non-performing assets decreasing to 2.29%, compared to 2.97% in the previous year, and net non-performing assets declining to 0.35% from 0.60% over the same period.

The company's Chief Executive Officer, Sadaf Sayeed, emphasised the company's customer-centric approach and its ability to secure competitive long-term funding from domestic and international lenders. Despite passing on the benefits of a lower cost of funds to borrowers, the company has managed to maintain its net interest margin, he said.

Shares of the company closed 0.93% lower at Rs 238.50 apiece, compared to a 1.09% decline in the NSE Nifty 50.