Excellence is a continuous journey
It gives me immense pleasure to present to you the Annual Report ofMuthoot Finance for FY20. Our extensive reach deep understanding of customer needsefficiency speed of service and reliability continue to make us the preferred gold loanfinancing company even during these challenging times. This is a true reflection of ourconcerted efforts over the years to live our purpose - driving financial inclusion andempowering people across the social pyramid.
That being said India and the world are going through a crisis thathas few parallels in recent history. What started as a health crisis with the outbreak ofthe novel coronavirus is now a full-blown economic one with significant ramifications thatimpact life and livelihoods. The resilience of businesses has been put to test.
At the same time humanity's collective spirit and ingenuity are onfull display.
As an organisation with a social conscience we are also playing ourrole in combating this crisis. And I hope you are taking good care of the health andwellbeing of yourself and your family.
An extremely challenging macro environment
The Indian economy dealt with its own set of challenges in FY20 withGDP growth slowing down every quarter. Contraction in the auto sector and delays in theconstruction sector along with subdued investment and private consumption collectivelytranslated into India recording its lowest growth rate in FY20 in over a decade. TheGovernment of India and the Reserve Bank of India implemented counter measures to revivegrowth.
Non-Banking Financial Companies (NBFCs) largely continued to take aconservative stance towards lending preferring to shore up liquidity and reduce exposureto low-margin businesses. The RBI implemented several measures to strengthen governanceand risk oversight of NBFCs and open up new avenues for the companies to raise funds andensure their financial viability. However the onset of the COVID-19 pandemic at the endof the fourth quarter brought economic activities to a near halt sending prospects of anyimmediate recovery to the backburner.
Robust all-round performance
Against this adverse backdrop in FY20 Muthoot Finance increased itsconsolidated total income by 28% y-o-y to C97072 millions. Consolidated profit after taxincreased 51% y-o-y to C31690 millions. Consolidated loan assets under managementincreased 22% y-o-y to C468705 millions. Gold loan assets under management alsoregistered a 21% y-o-y increase to C407724 millions.
Our housing finance subsidiary Muthoot Homefin (India) Limited sawincome rise from C2257 millions in FY19 to C2876 millions while profits moderated toC318 millions. Loan assets grew from C19075 millions in FY19 to C19769 millions. Theshare of stage 3 assets in total loan assets was recorded at 1.71%.
Our microfinance arm Belstar Microfinance Limited grew reasonablywell with loan assets increasing from C18419 millions in FY19 to C26310 millions.Profits increased from C729 millions in FY19 to C990 millions.p>
Muthoot Insurance Brokers Private Limited registered a premiumcollection of C3232 millions in FY20 up from C2676 millions in FY19. Total policiessold increased to 2.8 millions from 2.2 millions in FY19. Profits stood at C104 millions.
Our Sri Lankan subsidiary Asset Asia Finance Plc progressed well inFY20 with loan assets growing at 8% y-o-y to C5380 millions of which gold loan accountedfor ~31%. We plan to bring it at par with Muthoot Finance - a 90%-plus portfolio of goldloan in the coming years.
Muthoot Money Limited which is our new subsidiary in the vehiclefinance segment in the states of Telangana and Andhra Pradesh started extending loans forcommercial vehicles and equipment in addition to two-wheelers and passenger cars.
Its total loan portfolio stood at C5090 millions up 64% y-o-y whileprofits increased to C27 millions from just C3 millions in FY19.
A major highlight from the year was the successful raising of $1billion from international bond markets in two tranches. The overwhelming response to thefund raise is a resounding vote of confidence by foreign investors in our strongfundamentals and growth potential. The diversified borrowing mix coupled with theoutstanding credit ratings received from all major ratings agencies positions us well toachieve 15% growth in the current fiscal.
Responsible in every sense
True to our purpose of empowering the underserved/unserved segments ofthe society we also focus on inclusive development. Our community initiatives complementour financial inclusion agenda. We are committed to taking incremental steps to bringabout a meaningful difference to the lives of the less privileged by enabling urgentmedical care to those in need facilitating government efforts in rehabilitating victimsof natural disasters as well as the COVID-19 pandemic and bridging the gap in educationand social welfare. In FY20 we made significant additions to our healthcare programmethrough Muthoot Snehasraya and Muthoot Snehasancharini while beginning new initiatives incancer care. We also instituted new scholarships for meritorious students extended helpto widowed mothers and artistes in need and furthered our mission of raisingenvironmental awareness.
Profitability in conjunction with excellence has been our motto sinceinception. Our sustained and quality growth over the years is a testament to our abilityto deliver excellence in everything we do - conducting business with integrity andtransparency enhancing operational efficiency and embracing the latest technology. Wealso know excellence is a moving target. We remain entrenched in our constant pursuit ofexcellence deepening our engagement with our customers widening our base throughoutIndia and innovating our offerings.
It would have been impossible to achieve what we have without thesupport of our employees the guidance of our Board and the confidence of ourstakeholders.
I express my sincerest gratitude to you all. And I hope you willcontinue to be our pillar of strength in this exciting journey.
M. G. George