Gold loan business is expected to gather pace in the second quarter of the fiscal with the gradual unlocking of the economy, according to leading gold loan lender Manappuram Finance.
VP Nandakumar, MD & CEO of Manappuram Finance, said there could be a slight decline in the gold loan portfolio of the NBFC in the first quarter before demand gathers momentum. The NBFC expects growth to be in the range of 10-15% for the complete fiscal, with fewer loan defaults compared to FY21.
Gold loan portfolio declined quarter-over-quarter by 5.61% to Rs 19,077.05 crore in Q4, from Rs 20,211.58 crore reported in Q3 FY21. The lender had to auction almost 1.2 tonne of gold worth Rs 412 crore in FY21, with bulk of the recovery happening in the fourth quarter.
Gold prices fluctuated by almost 24.7 % in the last fiscal from a high of Rs 5,250 per gram to Rs 3,950 per gram. Nandakumar said gold prices can only go up from the current level given the global economic scenario, and defaults will be significantly lower than last fiscal.
“The auction in FY21 was one of the lowest when you compare it with FY17, when 3.8 tonne of gold worth Rs 929 crore was auctioned. In FY21, the auction was only 2.16% of the total gold assets under management, while in FY17 it was 8.35% and in FY18 it was 7.7%,” he said.
Gold under custody of the NBFC declined to 65.3 tonne as of March 31, from 72.4 tonne in the same period of last year. Average ticket size of the loans has also come down to Rs 50,000.
Regarding concerns of NPAs in the microfinance and vehicle finance subsidiary, he said both subsidiaries will perform better relative to last fiscal. “Currently, the collection in the microfinance company is around 65% for May when compared to 5% in the same period of last fiscal. In June, we expect collection to be as high as 80% as many restrictions are lifted gradually,” he said.
The gross NPA ratio of the microfinance division is 2.5% for FY21 as compared to 1.6% in FY20 and 4.5% in FY17. The net NPA position of the company stood at 1.53 % and gross NPA at 1.92 % as of March 31.
For the whole of FY21, the lender reported a consolidated net profit of Rs 1,724.95 crore as against Rs 1,480.30 crore reported in the year-ago period
