Growth in AUM has been a challenge: Muthoot Finance

India's largest gold loan company Muthoot Finance reported a net profit of Rs 268 crore for the quarter ended September 30, 2012 against Rs 246 crore in the same period last year. Its income from operations stood at Rs 1,299.5 crore versus Rs 1,284 crore (QoQ).

The company's assets under management (AUM) in this quarter grew by Rs 405 crore and currently stand at Rs 23,743 crore. George Alexander Muthoot, managing director, Muthoot Finance told CNBC-TV18 that it was a challenge for the company to grow its AUM in the current market environment. "We expect a flat or maybe a 10-15 percent growth by the end of the year compared to last March," he added. Below is the edited transcript of Alexander Muthoot's interview with CNBC-TV18. Q: What is the net interest income this quarter? How do they compare with the last quarter?
A: The total income for this half year grew by 29 percent .On year on year basis, Rs 2,610 crore is the half year income. The profit after tax (PAT) for this half year is Rs 514 crore as against Rs 406 crore of last year. This shows a year on year increase of 27 percent. Q: Could tell us more about the quarterly performance, what was the difference between the cost of money and the money you earned in the Q2? What was your spread?
A: The total income for this quarter is Rs1,316 crore versus Rs1,105 crore same quarter last year. Q: How much money do you make per loan in terms of the difference between the interest you charge and the interest you are charged when you borrow money?
A: The profit after tax for Q2 is Rs 268 crore versus Rs 215 crore in the same quarter last year. It shows 25 percent increase in the profit after tax. The average interest income for retail loan for this half year ending is 21.69 and the interest expense has gone up a little. It is now 11.5 percent. Q: Are your spreads 10.5 percent?
A: No, it is 10.1 percent. Q: How were your assets under management?
A: The assets under management increased in this quarter by Rs 405 crore and today it is Rs 23,743 crore. Q: Is the bottoming out over? How will you end the year in terms of assets under management?
A: No, we have been saying earlier also that the growth of the assets under management has been a challenge. We expect a flat or maybe a 10-15 percent growth by the end of the year compared to last March. Last March, the assets under management were Rs 24,400 crore. This year we see a flat or if things pan out in the a better way in the next 6-7 months then we can do better. But from the signs in the market the bottoming out has changed and we may see only a little upward trajectory in the next months. Q: From 10.12 percent spreads, where do you expect them to go in H2?
A: As far as spreads are concerned, there wouldn't be a big change because whenever the interest rate comes down we pass it on to the customer. So, whenever our cost of borrowing goes up we are forced to charge the customers. We will be able to maintain our spread between 9.5 to 10 percent.