George Alexander Muthoot, MD & Oommen K. Mammen, CFO addr the call:Highlights by Capital Mkt
The loan book of the company increased at steady pace of 14% to Rs 24833 crore at end September 2015. The company has added Rs 500 crore to the loan book in Q2FY2016, despite challenging environment. The company expects loan growth of 10-15% for FY2016.The number of gold loan accounts has further increased to 68 lakh at end September 2015 from 65 lakh at end June 2015.The company has been in the process of transforming its business, sales and marketing culture over last one year.The company has completed issuance of Rs 500 crore of NCDs in October 2015. The interest rate on fresh issuance of NCDs is consistently declining.
The gold bonds book of the bank company, which carries the higher interest cost of above 11%, is running down every month.As per the company, it would pass on the benefits of declining cost of funds to the customer’s subject to maintaining NIMs at 9%.
Interest rate charged by the company hovers in the range of 12-22% with the average lending rate at 18%. The lower interest rate is charged for teaser loans, where the LTV is substantially lower.The company is waiting for home loan finance license from RBI and NHB.The spike in NPAs in Q2FY2016 was mainly on account of slowdown of gold auctions due to festival season in Kerala.
The company intends to switch to 150 days overdues NPA recognition norms by end March 2016 in line with the guidelines, while plans to switch to 90 days overdues NPA recognition norms ahead of regulatory deadline of March 2018.
As per the company, at 90 days overdues basis, GNPAs would be higher by Rs 1000 crore at Rs 1634 crore at end September 2015, against exiting GNPA of Rs 634 crore at 180 days overdues basis.
The company has been changing its collection mechanism to have lesser impact of change in NPA recognition norms to 90 days overdues basis.
The company expects cost-to-income ratio to remain stable, as it do not plans to aggressively expand branch network for next two-three quarters.
Long term RoA is targeted at 3%.The broad of the company has declared the dividend of Rs 4 per share.The board has also approved the 100% acquisition of Muthoot Insurance Brokers for valuation of Rs 20 crore, subject to regulatory approvals. Muthoot Insurance Brokers has license to sell life and health insurance products.
The company expects its Sri Lankan subsidiary to declare small dividend by end 2015.
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