17 Feb , 2022 By : monika singh
NBFC Muthoot Finance has lowered its guidance for the current fiscal year to 10-12% from 15% with active loan base shrinking in the third quarter.
In Q3 of FY22, the number of loan accounts shrunk by 3% quarter on quarter (QoQ) while the number of active customers declined by 2% QoQ. Some customers have more than one loan account. New customer acquisition during the quarter stands at 4.2 lakh.
“More people took back their gold and closed loan accounts during Q3. Last fiscal year, in Q2 and Q3, there was a huge demand for loans right after the lockdown. Some of them abandoned their gold as the desired cash flow did not materialise and we had to auction some of them,” George Alexander Muthoot, managing director, Muthoot Finance, told FE.
“As the financial sector continues to be in the grip of Covid-19 pandemic in the aftermath of the second wave and the slowing down on account of the third wave, our focus was on the recovery of loans, especially the gold loan segment,” he added.
Auctions were also on the higher side for the gold loan lender at Rs 2,800 crore, the highest in four years, and the share of stage 3 assets in Q3 increased by 200 bps QoQ to 3.8%.
On a sequential basis, the loan assets under management of the gold loan division declined by 1% QoQ to Rs 54667 crore.
The NBFC does not expect NPA to increase further, and remain optimistic about growth in gold loans.
“Business is only limping and people are only spending for the essential. Things are getting better and we hope to see growth from Q1 of the next fiscal year,” he said.
The NBFC’s third quarter consolidated net profit increased 4% year on year (YoY) to Rs 1043.6 crore, largely owing to a good performance by the gold loan division.
The Kerala-based finance company, which also operates home loan, microfinance and insurance broking subsidiaries, said it is cautious regarding the non-gold business with NPA in the range of 5 to 6%, and expects growth only after three-four quarters.
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