Muthoot Finance has registered a 21 per cent drop in net profit, at Rs 194 crore, in the first quarter, compared with Rs 246 crore in Q1 of FY-13. Total income also fell 1 per cent to Rs 1,286 crore (Rs 1,294 crore).

The YoY decline in profit during the quarter was because of stagnation in loan growth and lower yield on liquidated loan accounts. Expenses remained high on account of lenders continuing to charge higher interest and administrative expenses going up, with the addition of branches in the last year, Chairman M.G.George Muthoot said.

Stable show

Speaking to reporters on Thursday, he said the company has delivered a stable performance in the quarter ended June 30 in an atmosphere marked by the sharp fall in gold prices and adverse perception about the gold loan sector.

The quarter saw the company taking sustained steps to address the fallout of sliding gold prices by restructuring the product portfolio and reinforcing risk management practices. The results do reflect the proactive steps taken by the company, he said.

Though there was a decline in loan portfolio by about two per cent, the gold holding increased from 134 tonnes as of March 2013 to 137 tonnes as of June this year. This indicates that there is a continued strong interest in the product in spite of the fall in prices, the Chairman said.

The outstanding loan accounts increased from 63 lakh accounts as at March 31 to 65 lakh loan accounts as at June 30. We feel demand is still robust, he added.

On the banking licence application, the Chairman said the company is best positioned to deliver the last mile connectivity considering its network in the rural and semi-urban areas and the experienced gained there.

“We are ideally looking at going for the next stage of growth through the banking model which has its own advantages and disadvantages. Since the advantages outweigh the disadvantages, we are looking at strongly presenting our case before the regulators”, he said.

> sajeevkumar.v@thehindu.co.in

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