Manappuram Q3 net down 48% to Rs 84 cr on low yields

Operating income during the reported quarter fell 19% to Rs 586 cr

Manappuram Finance today reported 48% decline in net profit at Rs 84.38 crore in the third quarter ended December 2012 due to a fall in yields on advances in a tight regulatory environment that led to lower disbursements.

The leading gold financing company had posted net profit of Rs 161.37 crore in the corresponding period of previous fiscal.     
Operating income during the reported quarter fell 19% to Rs 586.20 crore from Rs 721.37 crore a year ago.

Since April last year, the Reserve Bank has been tightenings its screws on gold loan companies through a series of measures. Among other steps, RBI has capped the loan-to- value (LTV) at 65% from a high of nearly 90% earlier and also limited banks' exposure to gold loan firms.

"The company had faced greater stress on account of its high LTV-led growth and the subsequent realignment necessitated by regulatory changes," Manappuram Finance Chief Executive V P Nandakumar said.

"However, we are confident that with the positive report of the (RBI-appointed) K U B Rao Committee, and renewed willingness on the part of banking sector, mutual funds and institutional investors to fund gold loans, the outlook would be positive," he added.

Referring to drop in profit, the Kerala-based company said the fall in yield was due to realignment of lending rates in line with lower LTV norms along with launch of lower yielding gold loan products to restart growth in disbursements.

Meanwhile, the gold loan NBFC's average assets under management declined 16% to Rs 10,393 crore from Rs 12,358 crore reported in the same period last fiscal.

Gold loan disbursal declined sharply by 45% to Rs 5,703 crore in Q3 from Rs 10,372 crore reported a year ago.     

However, the company said net NPA level improved to 0.77% from 0.86% in Q2 with the thrust on recovery. Tier-I capital ratio improved to 23% from 19% reported in the same period last fiscal.

"We opened 96 new branches during the quarter taking our national network to 3140 branches across 26 states and Union Territories," it said.