India's Muthoot Finance posts bigger-than-expected profit on strong loan growth

IIFL Finance

30/05/2024 12:23

BENGALURU, May 30 (Reuters) - Muthoot Finance  MUTT.NS ,
India's largest gold loan provider, reported a
higher-than-estimated quarterly profit on Thursday, boosted by
strong loan demand amid rising bullion prices.
    The company's standalone profit rose 17% to 10.56 billion
rupees ($127 million) in the fourth quarter, beating analysts'
expectations of 10.23 billion rupees, according to LSEG data.
    Its interest income rose around 20% to 33.58 billion rupees.
    Benchmark spot gold prices  XAU=  rose 22% in the
January-March period from a year earlier, bolstering loan growth
for lenders such as Muthoot.
    Rising prices of bullion benefit gold financiers by
increasing the value of pledged gold collateral, driving growth
as more customers seek loans against their higher-valued assets.
    Last week, smaller rival Manappuran Finance also reported a
bigger-than-expected profit.
    However, non-bank lenders have to also contend with elevated
financing costs, which rose nearly 30% for Muthoot in the
quarter.
    Analysts expect Muthoot also benefited from a regulatory
ban, in March, on IIFL Finance  IIFL.NS  from disbursing gold
loans due to "material supervisory concerns" in its portfolio.
    Muthoot's standalone loan assets under management increased
20% to 758.27 billion rupees for the year ended March 31.
    Earlier this month, Reuters reported that the central bank
had warned some non-bank lenders against disbursing cash loans
in excess of the permissible limit of 20,000 rupees.
    Muthoot's infrastructure was already in place to move its
remaining cash-transacting customers to digital channels,
Managing Director George Alexander Muthoot said in a statement.
    The company's shares ended 3.7% lower ahead of the results.
 
 ($1 = 83.2750 Indian rupees)

 (Reporting by Nishit Navin; Editing by Savio D'Souza)
 ((Nishit.Navin@thomsonreuters.com;))