Muthoot Finance Asset Quality, Recovery Excellent For Gold Loans, Says MD

Muthoot Finance Ltd. expects growth to sustain in both gold loan and non-gold loan businesses.

The gold loan business is on track with guidance and will reach the target of 15% by the end of this year, said Managing Director George Alexander Muthoot.

"Asset quality and recovery and all those things are excellent for gold loans because it's a fully secured book," he told NDTV Profit. "As of date, 13% is non-gold loan. In the next 3-4 years, we see it reaching 20%."

The company reported a 22.5% rise in consolidated net profit to Rs 1,145 crore for the October-December quarter of fiscal 2024.

Muthoot expects year-on-year growth to be at 15% AUM. While gold loan contributes 87% to the business, 13% comes from the non-gold business and from this, 9% is contributed by micro-finance like housing loans, vehicles loans and MSMEs. There are no issues with the non-gold businesses as they are directly interacting with the customers, according to him.

He expects the gold loan operating expenditure to be marginally lower, as the business performance productivity in branches is better. The RoA is higher at 6% and Muthoot expects it to be maintained.

Belstar Microfinanace Ltd., a subsidiary of Muthoot Finance, is considering applying for an initial public offering as it needs capital. Till then, the company will look at rights issue to bring in more capital, Muthoot said.