An employee of Muthoot Finance Ltd., one of India’s leading providers of gold-based loans, counts Indian one hundred rupee banknotes in a branch in New Delhi, India (Photographer: Anindito Mukherjee/Bloomberg)  

Muthoot Finance Jumps The Most In Over Two Years

Shares of Muthoot Finance Ltd. rose the most in more than two years after the company’s bad loans fell and assets rose in the quarter ended September.

The gross non-performing assets declined from 4 percent sequentially to 1.9 percent in the second quarter, George Alexander Muthoot, managing director of the non-bank lender, said in a conversation with BloombergQuint. No losses incurred from bad loans, he said. “We give more flexible time for the customers to repay the loan,” he said. “We auction the gold in case the customer further delays repayment.”

Shares of Muthoot Finance rose as much as 15 percent, the most since August 2016, and were trading 12.3 percent higher at 1:15 p.m. compared with a 0.18 percent gain in the benchmark Nifty 50 Index.

The gold financing company is aiming to clock an overall loan book growth of about 15 percent in the ongoing financial year, Muthoot said. “While our subsidiaries constitute over 10 percent of our total portfolio at present, we are targeting 15 percent by March. However, we may achieve around 13-14 percent."

Key Earnings Highlights

  • Net interest income down 4.6 percent year-on-year at Rs 1,114.2 crore.
  • Net profit up 8.5 percent at Rs 483.8 crore.
  • Consolidated loan assets under management increased by 21 percent.

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