Muthoot Finance Q1 net profit jumps 52% to Rs 858 crore

Muthoot Finance on Wednesday reported a 52 percent jump in its consolidated net profit at Rs 858 crore in the first quarter ended June of the current fiscal year.

The non-banking finance company had posted a net profit of Rs 563 crore during the corresponding quarter a year ago.

Total income rose 25.8 percent to Rs 2,606.82 crore during April-June quarter of 2020-21 as against Rs 2,072.11 crore in the same period a year ago, Muthoot Finance said in a regulatory filing.

Consolidated gross loan assets of the company increased 16 percent to Rs 46,501 crore as on June 30, 2020 as against Rs 40,228 crore a year ago.

Muthoot Finance is mainly engaged in gold financing business. It also has presence in home and loan financing, micro-financing, insurance broking business through various subsidiaries, besides having an asset finance subsidiary in Sri Lanka.

On a standalone basis, the company's net profit during Q1FY21 registered a 59 percent growth at Rs 841 crore as against Rs 530 crore in the year-ago period.

"Our branches were completely shut during the month of April due to nationwide lockdown. To ensure business continuity we upscaled our digital platforms. We recorded four-fold jump in digital loan disbursals since then," Muthoot Finance Chairman M G George Muthoot said.

"To encourage digital usage, we are incentivizing our customers with a cashback scheme to service interest payments through our online platforms," he added.

With businesses resuming, the company has witnessed a surge in gold loans as it is the most convenient form of availing working capital for small businesses and traders, he said.

The company's gold loan outstanding grew 15 percent from a year ago to Rs 40,495 crore as on June 30, 2020.

The company's managing director George Alexander Muthoot said, "Our disbursement during the quarter was lower on account of closure of branches in the month of April 2020 due to nationwide lockdown.

"Once the branches opened, we saw higher level of repayments than disbursements, probably, on account of restrictions in movement of people."

He said the company has witnessed a significant increase in disbursements since June 2020 which has continued in July and August.

"As initially guided, we are looking forward to achieve a 15 percent growth in gold loan portfolio for FY21. Company also maintained a liquidity buffer of Rs 8,477 crore as cash, bank and investments in liquid funds as on June 30, 2020," he said.

Muthoot Finance's non-gold loan portfolio in subsidiaries constituted about 12 percent of its consolidated loan portfolio.

Collections in non-gold loan portfolio have significantly improved month-on-month, the company said.

Additional COVID-19 provisions to the extent of Rs 32 crore were made for non-gold loan portfolio in the quarter, George said.

Shares of Muthoot Finance on Wednesday closed 1.32 percent higher at Rs 1,256 apiece on the BSE.