Muthoot Finance Q1 net slips 21%, provisions dip 3-fold

Moneycontrol Bureau

Kerela-based gold loan company Muthoot Finance reported 21 percent year-on-year drop in its first quarter (April-June, FY14) net profit at Rs 194 crore, due to fall in the net interest income (NII), that fell to Rs 554 crore as against Rs 591 crore a year ago, a dip of 7 percent y-o-y.

Also read: Here's what led to Shriram Transport profit erosion

Other income slipped significantly from Rs 6.32 crore to Rs 1.87 crore y-o-y. Total income remained almost static at Rs 1,284 crore during the three-month period. The finance (borrowing) costs rose about 5 percent y-o-y to Rs 730 crore.

However, Muthoot Finance shares surged to more than 7 percent immediately after the results declaration. The company's provisions and write-offs dipped nearly three-fold to Rs 8.48 crore compared with 23.56 crore in the corresponding quarter of the previous year (2012-13).

The outstanding gold loan portfolio rose 10 percent y-o-y to Rs 25,442 crore. The average ticket size of loan was little changed at Rs 39,257 crore.

"Though there was a decline in loan portfolio by about 2%, the gold holding increased from 134 tonnes as of March 2013 to 137 tonnes as of June 2013  which indicates there is continued strong interest in the product inspite of fall in prices. The outstanding loan accounts increased from 63lakh loan accounts as at 31st March 2013 to 65lakh loan accounts as at 30th June 2013," George Alexander Muthoot, Managing Director, Muthoot Finance said in a release.

The credit losses inched up from 0.01 percent to 0.023 percent during the quarter.

At 14:00 hrs, Muthoot shares erased their gains to trade at Rs 94, down 1 percent on NSE. The sensititve index - Sensex fell nearly 200 points to trade at 19,897 points. The company has applied for a new banking licence from the Reserve Bank of India.

saikat.das@network18online.com