In an interview to CNBC-TV18, George Alexander Muthoot, MD, Muthoot Finance shares details on the company's Q2 performance.
Below is the verbatim transcript of George Alexander Muthoot's interview with Latha Venkatesh & Ekta Batra on CNBC-TV18.
Latha: The fashion has been that gold is losing its sheen. Are you seeing it in the amount of gold loans being taken?
A: Gold may or may not be losing its sheen but gold loans are still one of the best options for anybody to take a loan. It is the easiest of loan that can be taken and I do not think gold loan per se is losing its sheen. However, what is happening is that overall credit growth has not seen any uptick and that is affecting the gold loan industry also.
Latha: What is your asset under management (AUM) rate of growth for the current year?
A: Quarter-on-quarter it was 14 percent for the last full year. However, for this year we should see something in the north of 10 percent. This is what we are thinking of AUM and similarly for the profit also.
Ekta: What will you project in terms of your gross non performing loans (NPLs). We do understand that last quarter you weren't that aggressive on recoveries. Has that picked up now?
A: It has been in the south of 2.5 percent but understand one thing as I always been saying that the NPLs are not real NPLs. It's just a flux of time which is seeing the NPLs. However, 90 percent of it would have gone off our books as of today. These are not NPLs. These are fully backed 100 percent gold. We do not lose any capital on any of these NPLs.
Latha: But what normally happens is people pay back at a deferred date or is it that you sell the gold?
A: We give them little more time and if they still do not come back then we have to auction it.
Latha: What spreads do you enjoy now?
A: We enjoy about 9 percent spreads now. We would like to keep it at that level going forward also. At one time it was about 10-10.5. today it is 9 percent and we will be able to keep that going because we see a reduction in the borrowing cost also; bank borrowing as well as non-convertible debenture (NCD) cost is coming down, which we generally pass on to the customers.
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