Managing Director George Alexander Muthoot said the regulatory caution around unsecured lending, particularly in microfinance and personal loans, had led to a revival in demand for gold loans.
“In the last 2-3 months, we have seen quite a lot of gold loan pickup. There is demand all over the country, especially in the last two quarters, because there has been a slowdown in the disbursal of unsecured lending,” he said.
In the July-September 2024 quarter (Q2FY25), Muthoot’s gold asset under management (AUM) was at ₹86,164 crore. The net income was ₹2,518 crore, and profit after tax was ₹1,251 crore, with margins at around 11%.
This is the edited excerpt of the interview.
Q: Could you tell us this gold growth guidance of 25% factors in what gold rate in comparison to what the current prices are. Also, if you could help us out with the growth rates, should we look at the assets under management (AUM) in smaller segments like Belstar as well as on the home finance vertical?
A: First of all, the good news is that we have crossed the AUM of ₹1 lakh crore which is a big target number for us and at the company, we are all very proud and excited about it, that we have reached the six-digit number. Having said that, your question is about what is driving the growth, etc. I feel I should do a little deep into this, saying that there is definitely a growth story in India and for the growth story to continue, people need funding. People need purchasing power. Last two three years, they were definitely getting it from all sources. But in the last two quarters, there have been lot of cautions by the regulator about unsecured lending, whether it is microfinance or personal loans.
Unsecured lending, there will be lot of cautions, and there are probably lot of instructions to banks and NBFCs etc. to go slow on the unsecured lending. In fact, the fintechs have almost dried up. FinTech lending is almost dried up, co-lending, everybody is very concerned about co-lending especially to the unsecured So banks and NBFCs exactly, are not very keen to do lot of personal loans, etc. on unsecured.
At this point of time I should look back only at what was during the COVID time when banks were not lending and then the gold loan came into play. The gold loan came as a saviour so I see the same thing now. In the last two, three months, we have seen quite a lot of gold loan pickup. There is demand all over the country, especially the last two quarters, because I feel that there has been a slowdown in the disbursal of unsecured lending. So that is why we thought that we should be able to revise our guidance to 25% in the gold loans segment.
Q: This 25% factors in gold prices at what rate? I ask you this, because gold has come off 6% from the recent peak. What are you factoring in in terms of pricing, and also, as I have asked earlier, you know, what is the AUM growth of the home loan, as well as Belstar, which is the MFI vertical?
A: The price factor, we don’t do the price factor, sir. This is only the demand, the demand which is coming from the sectors, from the rural areas, from all over the country that is what is spurring the demand. Gold price definitely helps, because it strengthens our portfolio, and also may be put little more money in the hands of people. Now, what the unsecured lending’s, etc., microfinance in particular, they had a terrific run in the last year, but in Q1 and Q2 they have definitely plateaued. Last quarter there was no growth in the microfinance.
We are definitely not going – what should we say, aggressive on the microfinance. Probably we will see in the next one or two quarters, we will see almost a very low growth, or almost a nil growth in this microfinance sector.
In the home finance, yes we are doing well. The gold finance department is doing well so do the other subsidiaries.
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The company, which has a market capitalisation of ₹75,445 crore, has seen its shares rise 41% over the last year.
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