Manappuram Finance auctions Rs 404 crore worth gold in Jan-March quarter

Gold financiers typically liquidate the collateral through auctions when loans turn bad as it helps them make quicker recoveries. The auctions helped Manappuram Finance to restrict the gross non-performing asset (NPA) in the gold loan portfolio under 2 per cent, the company said in its investor presentation accompanying the Q4FY21 financial results.

Lower gold prices also impacted the lender’s growth in gold assets under management (AUM), which declined 5.6 per cent on a quarter-on-quarter (q-o-q) basis to Rs 19,100 crore. Manappuram Finance attributed the fall in AUM to the higher auctions in 4QFY21 and the tendency of borrowers to foreclose loans ahead of impending auctions. Gold prices fell 12 per cent sequentially and 21 per cent from the peak levels seen in Q2FY21 to Rs 4,110 crore per gram at the end of March 2021. The price decline was partly offset by an increase in the loan-to-value (LTV) ratio to 71 per cent from 63 per cent, Manappuram said.

The company's consolidated net profit rose 17.6 per cent year-on-year (y-o-y) to Rs 468.3 crore on the back of a 7.2 per cent rise in net interest income to Rs 1,098.4 crore. Its consolidated AUM rose 8% y-o-y to Rs 27,200 crore.