One of the renowned NBFCs, Manappuram Finance’s gold loan portfolio is expected to grow by 10-15% in the current financial despite a slowdown in new customer acquisition.
Mr. Nandakumar, MD & CEO of the company, said that business is strong in the gold loan sector, however, the NBFC might persist with conservative lending and focus on consolidation of the company. The overall demand for credit has no longer reached the pre-Covid state. For them, present customers have taken more loans and compensated for the slowdown visible in new consumer acquisition. Customers have also leveraged at a better gold price.
Around 25 % of the customers in microfinance, housing finance, and car leasing business have availed the moratorium. Collections in the microfinance enterprise will move 85% this month, collections in the vehicle finance division and housing finance are expected to touch 90% this month. This assumes that some credit loss in the coming region in this zone, however, has taken steps to furnish this.
New loan disbursals are lower in the non-gold portfolio and seen around 50% when compared to a closing year. The company’s non-gold mortgage businesses now account for a 28-30% share of its consolidated AUM.
In the first quarter, the overall business environment becomes critically affected by the lockdown. However, the company has been capable of maintaining growth in our core business of gold loans thanks to the digital infrastructure, especially its robust online gold loan platform. Now they can convert 2,000 customers per day onto the digital platform.
The share of online business has now grown to 62 % from 45 % in the pre-Covid period. Regarding the cost of funds,the average borrowing cost for the stand-alone entity went down marginally by 7 bps during the first quarter to 9.39 %. The company expects that cost of funds is likely to come down further by 10-15 bps in the current quarter.
The average loan-to-value of the gold loan company is seen at 65 % and it holds 69 tonnes of gold at the end of the first quarter. The lender had reported a consolidated net profit of Rs 367.97 crore in its first-quarter results, a boom of 38 % over Rs 266.78 crore recorded in the year-ago quarter.
