Muthoot Finance’s Q3FY25 net profit rose 33% to Rs 1,363 crore, driven by strong demand for gold loans. Managing director George Alexander Muthoot speaks to Narayanan V about the factors behind the profit surge, record AUM growth, future targets and challenges in its microfinance subsidiary.
What drove the 33% increase in net profit during the quarter?
Profit is only a direct function of AUM growth. In Q3FY25, our standalone loan AUM saw a significant rise of Rs 26,305 crore, driven by a strong 37% y-o-y growth in our core gold loan portfolio. As of December 2024, our standalone gold loan AUM stood at Rs 97,487 crore. There was a surge in demand for gold loans, particularly during the festive season. This was largely due to lenders slowing down on personal loans and microfinance disbursals. However, people still needed funds for consumption and other expenses, leaving gold loans as the next best option — which is exactly what happened.
Adani Green decides to ‘respectfully withdraw’ from $1 billion wind energy project in Sri Lanka Do you see this trend continuing in Q4 as well?
Typically, Q3 hasn’t been a high-growth quarter, but we saw a strong momentum this year. In addition to demand, the rally in gold prices over the past few months has made gold loans more attractive. So far, our gold loan portfolio has grown by Rs 21,660 crore, marking a 29% increase in 9MFY25. While we can’t provide specific guidance, we expect to surpass the 29% growth for the full year.
Your subsidiary, Belstar Microfinance, saw its profit drop sharply to Rs 2.4 crore from Rs 100 crore in Q3FY24. What led to this decline?
The drop is mainly due to the moderation in disbursements in response to sectoral challenges. The entire microfinance sector is growing in a calibrated manner. In Q3FY25, we disbursed Rs 1,305 crore, a 47% y-o-y drop, as a cautious approach. Our microfinance AUM remains largely stable at Rs 8,703 crore, compared to Rs 8,835 crore a year ago.
Belstar’s gross non-performing asset rose to 2.91% from 1.88% in Q3FY24. Our collection efficiency dropped slightly to 98.53% from 99.32% a year ago due to cash flow issues faced by customers. Our focus remains on strengthening collections and improving the quality of our loan book. We expect conditions to improve over the next 2-3 quarters.
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