Muthoot FinCorp plans to reduce the share of its gold loan business

This report has been updated.
Muthoot FinCorp Ltd, the flagship company of the 137-year-old Muthoot Pappachan Group, is planning to reduce the share of its gold loan business from around 98 per cent to 70 per cent in future, a top executive officer of the company said on Tuesday.

"In the past, 98 per cent of our revenue used to come from a single product—gold loans. In the last 12-18 months, we have increased our presence in gold loans and also added some function specialities and capabilities to meet the lifecycle requirements of the customer," said Shaji Varghese, chief executive officer of Muthoot FinCorp.

"We will continue to focus on gold loans. Just that the ratio of other businesses will also grow. In the next one year, we want to bring it to 80:20 and in future to 70:30. The majority of the other businesses will be SMEs and mortgage," Varghese added.

During the last financial year, the company reported its highest-ever loan disbursements with consolidated disbursements at Rs 61,703.26 crore, up by 18.60 per cent. The assets under management (AUM) stood at Rs 33,359.30 crore with net profit at Rs 1,047.98 crore, an increase of 62.12 per cent over the preceding financial year.

"A combination of gold loan growth, price increase, doorstep service, and diversification helped us in having improved numbers during the financial year," he said.

As standalone, Muthoot FinCorp’s disbursements rose by 15 per cent year-on-year (Y-o-Y) to Rs 50,167.12 crore from Rs 43,443.26 crore in the previous year. The profit after tax (PAT) increased by 22.40 per cent to Rs 562.81 crore compared to Rs 459.81 crore in FY23.

The Assets under Management (AUM) stood at Rs. 21712.34 crore, up by 23.26 per cent compared to Rs 17,615.07 crore in the corresponding previous year.

The revenue was reported at Rs 1,197.31 crore in the January-March quarter of FY24, posting a growth of 25.59 per cent compared to Rs 953.38 crore in Q4 of FY23. As of March 31, 2024, the number of total customers served by Muthoot FinCorp stood at 4.29 million, a 14 per cent increase compared to the previous financial year.

"Our focused efforts to diversify our product range have effectively addressed the varied financial needs of our customers in the lower middle-income segment. Committed to continuous innovation, we are dedicated to developing a more comprehensive suite of products to support our customers’ evolving financial needs throughout their life cycles. This approach has successfully expanded our customer base and reinforced our commitment to financial inclusion. As we look to FY25, we are enthusiastic about extending our reach and enhancing our services to accommodate an even greater number of customers," stated Thomas John Muthoot, chairman of Muthoot FinCorp.

“At Muthoot FinCorp, it was a landmark year of crossing Rs 50,000 crore in disbursements in the last financial year. We continue to be a retail service provider. Seventy-eight per cent of our branches are in non-metro areas, bringing us closer to the customers who had limited access to formal financial services. Eighty-one per cent of customers availed loans below Rs 1 lakh. We look forward to continuing serving lower middle-income families alongside focusing on financial inclusion driven by our purpose of transforming the lives of the common man by ensuring his financial well-being,” said Varghese.