Muthoot Finance - Landing a Golden Hand
10/10/2011 5:51 PM Monday
Muthoot Finance is the largest gold financing company in India in terms of loan portfolio. The company provides personal and business loans secured by gold jewellery. Company is a “Systemically Important Non-deposit taking NBFC” headquartered in the southern Indian state of Kerala. Company’s operating history has evolved over a period of 70 years since M George Muthoot (the father of our Promoters) founded a gold loan business in 1939 under the heritage of a trading business established by his father, Ninan Mathai Muthoot, in 1887.
Company’s total Gold loans under management as on June 2011 stood at Rs17,803.5 crore, rise of 96.9% as com-pared to Rs9,040.3 crore a year ago. Total gold Jewellery as security against loan increased to 120 tonnes as on June 2011 as compared to 77 tonnes in June 2010.
Muthoot rolls out 50,000 loans in a day. The company has been successful in changing the perception of the people about the gold loans from being a distressed loan to convenient loan. We have been touching the lives of the common man, who had never gone to banks for a loan; this is also called as financial inclusion.
Gold loan as a product has been there since ages. The sec-tor has been dominated by unorganized players like money lenders and pawn brokers spread across nook and corner of the country. We have brought the systematic approach and innovation on the table to covert some of this in to an organized and respectable sector. This business has been pursued by large PSU banks in the country.
Because of the natural inclination of the country toward gold as jewellery the potential in this sector is tremendous. The untapped unorganized sector is very huge, which is a big play ground for us to enhance our size in terms of loan portfolio, branch network and people as an asset of the company. We are the only company which has well balanced geo-graphical spread in the ratio of 40:60 in North and South respectively. We had already made considerable progress in South and are on the path to replicate the same in North and other geographies of the country.
Muthoot as a brand is very strong in the minds of the people in the country. This business is predominantly driven by the trust and safety on the credentials of Muthoot Finance. Company’s total branch strength as on June 2011 is 2,997 and employees strength stands at 19,125 people. Average gold loan outstanding per branch stands at Rs5.94 crore as on June 2011.
South India with 65% of the total branches contributes 74% of total gold loan assets, followed by 18% branch presence in North India which contributes 15%. Western India with 13% branch penetration contributes 8% of the business while 4% branches in East India contribute 3% of total gold loan assets under management. Company’s net NPA on gross retail loans was 0.26% in June 2011 quarter, improved from 0.36% a year ago. Gross NPA on gross retail loans as in June 2011 quarter stands at 0.31% as compared to 0.42% in June 2010. Net Interest margins (NIMs) for the latest quarter ended June 2011 increased to 11.2% as compared to 10% as on June 2010. Return on equity for the quarter ended June 2011 stands at 40.84%. Book value per equity share as on June 2011 stood at Rs64.47 per share.
For the FY 2010-11, company posted net profi t of Rs 494 crore on total income of Rs2,316 crore. PAT to average retail loans was 4.51% for June 2011 quarter as compared to 4.09% for the quarter June 2010. For Q1FY12, company posted net profi t of Rs190 crore, up 125% Y-o-Y on total income of Rs920 crore, up 140% Y-o-Y.
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