Muthoot Finance Ltd sees a dip of 21% in the net profit of it first quarter this year compared to the same period last year. The firm declared a net profit of Rs 194 crores in Q1 FY14 as compared to Rs 246 in Q1 FY13. The year on year decline in profits was on the account of stagnation in loan growth, lower yield on liquidated loan accounts coupled with problems of high administrative expenses.
Total income of Muthoot Finance in the first quarter of this financial year stood at Rs1286 crores, which is a% lower when compared to its total income of Rs 1,294 crores in the same period last year.
“Due to sharp fall in gold prices and consequent adverse perception about the gold loan sector, the company has seen a stable performance in the quarter endedJune 30, 2013. The company has taken steps to address the fallout of sliding gold prices by restructuring the product portfolio and reinforcing risk management practices," says M G George Muthoot, Chairman, Muthoot Finance Ltd.
The company also saw a ten% increase in its outstanding gold loans. It stands at Rs 25442 crores in first quarter of FY14, as compared to Rs 23082 crores in the same period last year. The firm saw a decline in its loan portfolio by about 2%, and the gold holding increased from 134 tonnes as of March 2013 to 137 tonnes as of June 2013.
Speaking about the company's application for the banking, “Considering our network in rural and semi-urban areas and experience gained in these areas , we are best positioned to deliver the last mile connectivity. We are ideally looking at going for next stage of growth through banking model which has its own advantages and disadvantages," said Muthoot.