Good evening to everyone. On behalf of Nirmal Mammen, Michigan Equities, we welcome you all to the February 2025 earnings conference call of Muthoot Finance Limited. We are pleased to host the senior management of the company, represented by Mr. George Alexander Muthoot, Managing Director, Mr. Alexander George, Whole-time Director; Mr. George M. Alexander, Whole-time Director; Mr. George M. George, Whole-time Director; Mr. George M. Jacob, Whole-time Director, Mr. Ethan Alexander, Executive Director, Mr. K. R. Bijimon, Executive Director; and Mr. Oommen K. Mammen, Chief Financial Officer. I now hand over the call to MD, Sir Mr. George Alexander Muthoot, for his opening remarks, for which we can have the floor open for Q&A. Thank you, and over to you, Sir.
Thank you, and good evening to all. Today, Muthoot Finance held its board meeting for the financial year and commercial year 2024-2025, as well as for the quarter four of the last year. The board meeting has just gone over, and we have declared themselves, and I'm sure it is available for you all. I would like to speak of some of the highlights of this year's performance. We have had the highest-ever consolidated non-AUM of INR 120,000 crore as of March, and also the highest year-on-year growth in AUM of INR 33,000 crore, which is about 37%. The consolidated profit after tax stands at INR 5,362 crore in this year. It is up by 20% year-on-year. The standalone AUM stands at INR 108,000 crore, and the historical year-on-year growth in non-AUM of INR 32,800 crore. The standalone profit after tax stands at INR 5,200 crore. It is up by 28% year-on-year.
Regarding the gold loan per se, the gold loan AUM of Muthoot Finance stands at INR 1,02,956 crore, which is certainly a historic moment for us since we have reached the INR 1,00,000 crore mark, and the highest year-on-year growth of gold loan of INR 30,000 crore, which is again 41% of the previous year's growth. Muthoot Finance has declared a dividend for the year, which is 250% on the face value, or INR 26 per equity share. During the year, the group opened 850 new branches, and S&P Global Rating has upgraded Muthoot Finance's long-term issuer credit rating from BB to BB plus, with a stable outlook. Moody's Rating has also upgraded the long-term issuer rating of Muthoot Finance from BA2 to BA1, with a stable outlook.
We have had 1.5 crore downloads in the Muthoot iMuthoot app, and Muthoot Finance is the only pure-play gold loan NBFC in the upper-layer NBFC classification of the Reserve Bank of India for three years in a row. We have received many other recognitions, etc. Coming to the subsidiaries, the Belstar Finance has opened 57 branches in the last year and the business, and has generated a profit after tax of INR 460 million in spite of the turbulent year for the microfinance sector. Stage three loan assets at 4.98% is in line with their peers. Muthoot Home Finance, the loan AUM stands at INR 29.85 billion versus INR 20 billion in the last year, a growth of 47%. The loan disbursal of INR 12.42 billion in this year compares with INR 8.15 billion of the previous year.
The interest income also increased to INR 273 crore from INR 178 crore, and the profit after tax stood at INR 39 crore for this year versus INR 18 crore in the previous year. The GNPA at 1.1% in financial year 2024 versus 1.88% in the previous year, and the Net NPA at 0.46% versus 0.57% in the previous year. Muthoot Money, the loan AUM stands at INR 3,903 crore versus INR 1,100 crore last year, a growth of 248%. The branch net worth increased to INR 992 crore from INR 470 crore last year. We are proud to announce that this year we crossed the historic milestone of INR 1,000 crore gold loan AUM, reaching INR 102,000 crore, and all other things which I said definitely have been good for the company, and we see good performance. We should see good performance in continuing years also. With that, I think I will close my opening remarks, and we will—oh, sorry.
The Sri Lanka company has also done well. As of March, the total holding in the total business has financed—the total holding is at 9.6 crore equity shares, representing 72% of the company, and the company has also done well. The company's profit has been quite good last year also. The AUM stands at LKR 3,133 million with a total revenue of.
Sorry to interrupt, sir, but your voice is coming. There is a static in the voice.
Okay, I'll keep closer. Yeah. The Asia Asset Financ e, before 72% stage, the total revenue increased to LKR 609,000.
Sir, there's still some disturbance in the line.
Hello. Can you hear me?
Yes, I'll rejoin you to the one second. Ladies and gentlemen, we'll rejoin the management online with us. Please stay connected. Ladies and gentlemen, we have the management back online with us, so you may proceed.
For Belstar Finance, the total revenue increased to INR 2,125 crore against INR 1,851 crore previous year, with a year-on-year increase of 15%. The loan AUM stands at INR 7,970 crore, and it achieved a net profit after tax of INR 46 crore in the financial year. Muthoot Insurance Brokers also had a premium collection of INR 589 crore and a profit after tax of INR 166 crore for this year. Asia Asset Finance has also done well. It has achieved a profit after tax of LKR 44 crore in the last year. Muthoot Money, which is also a wholly-owned subsidiary of Muthoot Finance, has a total revenue of INR 432 crore as against INR 176 crore in the previous year, and it achieved a profit after tax of INR 12 crore for this year. I think with that, I will conclude my opening remarks and leave the floor open for your questions and clarifications.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Abhijeet from Motilal Oswal. Please go ahead.
Yeah, good evening, everyone, and thank you for taking my question. First of all, congratulations on a very strong year. My question also lies there. Obviously, the gold prices have helped during this year, but I mean, not to take any credit away, just trying to understand two very, very strong years, FY 2024 and FY 2025. How would you look at gold loan growth for this year and the next year? The related question on gold loans, what we have seen in this quarter is, I think, I mean, the entire industry has done well, and because of which there has been no aggressive competition, or at least it is not reflecting in the news. Just trying to understand, if you could just explain the competitive landscape as well. Is there enough for everyone, or has the pie itself become so big that everyone can comfortably chew at that, and there is no need for, I would say, aggressive pricing at this stage?
Regarding your question on the next year's guidance, year-on-year, we have always been giving a guidance of 15%. I don't think we want to change that. We will continue to do the minimum growth guidance of 15% for this year also, but going forward after quarter two, we should think of maybe if there is any need to revising the guidance. We have always guiding at 15%. Of course, last year we have grown by 41%, but that apart, we from our side would like to do a very conservative guidance of 15%. Now, you yourself said the competitive landscape is there, but yes, I agree with you. The pie has increased. It is increasing because more and more people are now looking at using the gold or monetizing their ornaments to take a gold loan, and that is what is attracting new players into this market.
I am sure many of the gold loan companies have grown business and also the banks. The pie is increasing. Nobody has degrown. Everybody has grown only, and the banks have grown. NBFCs have grown. I think the market is mature, not mature. This market is widening, I think. I agree with you.
Okay, sir. Sir, I mean, the other thing I wanted to understand is we would have all gone through the draft gold lending guidelines that came out. One of the key things which was highlighted in this gold lending guidelines was also the fact that LTV needs to be maintained at 75% throughout the tenure of the gold, which most of the NBFCs, I would say, were not doing well yet because there was no regulatory requirement to do that. Now, if this draft guidelines actually gets translated into final guidelines, just trying to understand if you've had a chance to work on this, trying to understand what would disbursement LTVs look like going ahead if these draft guidelines actually get translated into final guidelines.
Okay. First of all, the draft guidelines have come. Everybody has gone through it, and sure, everybody has read it and also have got their own opinions on it. The last date for submitting the draft guidelines was yesterday. So we, along with many others, have given their suggestions. We should wait for the regulator to come up with the final guidelines. Having said that, our take on this, or my take on this, our company's take on this would be, I feel that there is a lot of things happening in the gold and gold loan market. Gold prices are shooting up. In the last one year, it has gone up by more than 50%. So that again, the gold price and the jewelry price and the gold price is one factor of it.
Second factor we have seen in the last one year, quite a few players have started coming into this. Most of the banks who were not very keen on this in the last one, two years have started becoming very keen. There is a lot of activity in the gold loan sector from the NBFCs, from quite a few new players coming into this. Those players coming into this has always attracted regulatory oversight or regulatory concern.
Sorry to interrupt, sir, but your audio is again cracking up.
Can't hear at all.
Now I can hear you, sir.
Okay. Now I'm exactly on the mic and speak. Okay. The regulatory guidelines are definitely a reaction or action from the regulator when many new players start coming into this. A good part of the new draft guidelines are to harmonize the processes which are followed, which are to be followed by the NBFCs. Gold loan NBFCs, maybe the old gold loan NBFCs like us have been following all these things, but I'm sure the regulator is not sure whether all the new players coming in are following or will be following.
Sorry to interrupt again, but yeah, again, it's leaking up.
The new guidelines, the draft guidelines.
Oh, so you're not audible.
Yes.
Hello? Are you there?
Is it a problem?
Yes, sir. There is a problem in your connection, I guess.
You want to repeat the phone number and mobile number?
Yes, sir. If you can provide the mobile number, I'll dial in.
Yeah. 98470.
98470. Yes, sir.
84012.
84012. I'll dial in, sir. Ladies and gentlemen, please hold while we dial in the management. Ladies and gentlemen, we have the management back online with us. Sir, you may proceed.
Okay. So the question was about the new regulatory draft guidelines. Can you hear now?
Yes, sir. You're loud and clear.
Okay. The new regulatory guidelines we've seen or Muthoot sees is mainly coming from the RBI or the regulator because new players are entering into the market, and the gold price is also going up very fast, in fact, 50% in the last one year. This is certainly raising some red flags or maybe concerns with the regulator as to how this is going to pan out. A similar thing happened in 2012 when many new players started coming into this gold loan market, and that time also the regulator came out with some regulations, similar or similar regulations, which finally culminated in a guideline or a report from the commission, the KUD Rao Commission, which was again implemented, and that implemented regulation is what is happening now.
What is happening is the new players who are coming may not be familiar with the processes, nuances of gold loan, and that is what the regulation mainly tries to harmonize. The second question is why when the gold prices, etc., are going up and new players are also going up, whether the regulator should look at maybe tweaking the LTV, etc. They have given some guidelines on that, some draft guidelines on that. There are a few pain points there, especially with the LTV, etc., which is different for NBFCs and banks, which as an association of gold loan companies, the association has taken up with the Reserve Bank of India and certainly asked for a personal hearing also on this, and we are yet to hear from them.
Other than that, the regulations are quite good, quite useful for the sector, and I'm sure with these regulations coming into place and the few concerns which we see being set right by the regulator, I think this is going to be a good time for the NBFC gold loan.
Okay, sir. This is useful. Just one last follow-up. In Muthoot Money, we started doing gold loans now, and we've seen good traction as well. Just trying to understand, is there anything differently we are doing in Muthoot Money, or is this more an extension of the parent entity, Muthoot Finance?
No, Muthoot Money started as a hypothesis, a number of hypotheses, used vehicles, four-wheelers, two-wheelers, etc. We had a portfolio of about INR 600 crore-INR 700 crore at one time. Three years soon after that, the pandemic came, and thereafter also we started seeing stress in that, and finally we were not able to really jack up the business. Now we are slowly winding down the business, and at that time when the business was coming down, we started foraying into gold loan, which was certainly the group's strength. Today we are concentrating mainly on gold loan, and the hypothesis portfolio is actually running down.
Today we have, so if you ask about the processes, no, the processes are the same because the management is the same, but different set of CEOs, different set of branches, different set of people, but of course the Muthoot branch is there, and the processes are the same as Muthoot branch.
Okay, sir. That's all from my side. Again, congratulations on a strong quarter, and I wish you an uplifting result.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to two per participant. The next question is from the line of Hership from Premji Invest. Please go ahead.
Hello. Hi, sir. Am I audible?
Yeah, you're audible. Yes.
Yeah. The first question was on the stage three and the credit cost. If you can help us break through the stage three within the gold and in the non-gold loan portfolio.
Yeah, please. Stage three loans on gold loan will be about INR 3,400 crore.
Okay.
License will be non-gold. About INR 300 crore will be non-gold.
Understood, sir. Sir, I think the question was that when we look at this credit, this year's credit cost, I think it's slightly elevated versus the previous few years, and if you try to strictly break down, then 50% of the credit cost would be from non-gold loan, if I'm reading it correctly. Then I wanted to just get your thoughts that going forward, how should we look at this? It's already 5% of the portfolio. Will the mix keep on increasing? If yes, then how should we look at the credit cost? Should we look at it that since these are the same customers for which we have gold loan, ultimately this money will be coming back? There's even though unsecured in nature, but that might not be the risk. I just asked the second question also, sir, on the branch piece. Do we have any approvals right now, or are we expecting any approvals for branch expansion? The other thing, on Muthoot Money, why aren't we expanding the branches much faster over there, or are we restricted on branch expansion there also?
Okay. On the first question is on the ECL. On the impairment, total impairment for the whole year is about INR 766 crore. Out of that, INR 130 crore will be about the write-off. The remaining INR 630 crore will be because of the incremental provisions required because of the growth in the loan book. On stage one and stage two, both on the gold loan, primarily on the gold loan.
Okay. You are saying all the increase in provision is with respect to the gold loan itself?
Yeah. Because we have not increased the non-gold in a significant manner. Probably we would have increased by about INR 2,000 crore in the last one year. Primarily the impairment portions have increased because of the increase in the gold loan, because we have increased the total loans by about INR 30,000+ crore . On that itself, the ECL portions would have gone up.
Sir, my question was that because over there, whatever stage three has happened in the non-gold loan, I remember in the last call you said that we provide 100% as soon as it slips to stage three. If they go by that, then of the INR 767 crore-INR 780 crore of impairment credit cost this year, my assumption was more that like around INR 200-300 crore has been from the new business. Is that right? I think the write-offs of INR 130 crore are from new business, you are saying. Beyond that, another INR 100 crore-INR 150 crore would be provisions on the new business.
I don't know what you intend by the new business, because in the last call.
Non-gold loan business. Sorry.
Yeah. In the last call, we had mentioned about the personal loan business, where we have done through our branches. There is a rise in the NPA problem because of some weakness in terms of collections, etc. Because of that, there is an increase in that. That would have certainly factored in the increase in the ECL portion. That is one thing. Second thing is the write-off. There is INR 130 crore. You asked me what was the gold loan NPA last year. Last year was about INR 2,400 crore out of INR 2,484 crore. This year, out of total INR 3,700 crore, the gold loan book is INR 3,350-odd crore, and the balance of INR 350-odd crore is because of the non-gold business.
There is an increase of around INR 250 crore in non-gold business, which we would have certainly included in the impairment, which I have explained in the last quarterly call that there is a specific increase in the NPA in the branch-based personal business. That is more of a one-off kind of impact where we are stabilizing the collection mechanism, etc.
Your second question about the branches, we already have approval for 115.
115 branches, which we are going to open this year. Branch opening, we do either in Muthoot Money or in Muthoot Finance. It is happening in the normal course. It's not that we are starved of branches. The branches are growing, and the business also is growing. Branch opening is not an issue for us.
Got it. Sir, just one clarification. This 115 is for Muthoot Finance.
Muthoot Finance.
Okay. This is for correlated. We have an option to open 115 more branches.
Yeah. Yeah. We will go at that later. Once we open the Muthoot Finance branch, we will think of the Muthoot Money branches also.
Okay, sir. Thank you.
Thank you. The next question is from the line of Shreya Shivani from CLSA. Please go ahead.
Yeah. Thank you for the opportunity. My first question is again on the asset quality. Just wanted to understand that for the quarter, if I take the INR 74 crore of write-off and if I just balance with the provisions and the gross fee given, there is a—I mean, there seems to be some upgrades and recoveries that have happened in the quarter. Can you help us understand about that? Also, what is the auction number for the quarter, for the year, and for the previous fourth quarter 2024 and for FY 2024 as well, if you can share that number?
In December end, the stage three portfolio on gold loan was INR 3,700 crore plus. This has come down to INR 3,347 crore. December total NPA was INR 4,117 crore. March, it has come down to INR 3,700 crore. To the extent of around INR 400 crore has happened. Mainly, it is in the gold loan book. In terms of auctions, we had auctioned about INR 400 crore during last year, INR 461 crore last year. Last full year, it's INR 461 crore. Yeah.
This was INR 461 crore in FY 2025. What was it in FY 2024? So that I can check from the annual report. Yeah, it's fine. Yeah. Just wanted to check one thing from the annual report.
INR 960 crore. Yes. Go ahead.
Sir, just wanted to check. Sometimes the auction number that you mentioned on the con calls, and when we check with the annual report, it tends to not match. Does it not include the interest outstanding? What is the difference in the number that you give in the con call? Interest outstanding.
The number which we always talk about in the con call is the principal amount, principal amount of loan. In the RBI reporting, in the annual report, it is talking about the release price and the total dues.
Sorry, could you repeat? In the annual report, what do you talk about?
The total dues and the auction releases. Principal plus interest.
Yeah. Okay. Okay, sir. This is useful. Thank you so much.
Thank you. The next question is from the line of Shweta from Elara Capital. Please go ahead.
Thank you, sir, for the opportunity and congratulations on a good quarter. My question pertains to the draft norms only. I am two sets of questions there. One is, if the draft norms were to go in similar state through, then will we see change in business mix or shift more towards non-gold lending? Is the business mix changing? Or even outside of these draft norms implementation, do we have any strategy plans or thought process for business mix tilting now towards non-gold? That is question number one. Question number two, while you explain that these draft norms more from the regulatory and competition and overall landscape perspective, I want to understand more from Muthoot Finance business model perspective. Just to deep dive slightly more into, especially the LTV norms, wherein we were also just talking about principal plus interest.
Now the new LTV calculation will be on principal plus interest, plus there are requirements of internal limits on gold loan portfolios to manage risk, which might potentially constrain your gold loan volume. Plus, there is now have to be a clear bifurcation on consumption versus income generation loans. There will be stricter sort of monitoring across periods. If we put together these kind of restrictions and the implementation or the draft norm implementation were to happen in current state of affairs, do we see any interim impact on disbursement? This is outside what is happening on the gold price action. Therefore, do you see any changes in your practices or need for customer awareness? Yeah, those are my two questions. Thank you.
Very lengthy question. You gave most of the answers in the questions also. The draft guidelines is still the draft guidelines. We have to wait for the final guidelines. That is number one. The guideline mainly talks about the processes, which have to be harmonious. That is the number two. The only thing which we, as an association of gold loan companies, would like to bring to the attention of the regulator is that the LTV, which is being tweaked, would not be in the interest of the customer. Because if the NBFCs are placed at a disadvantage, most of the customers may go back to the money lenders. In the last 20-30 years, with a lot of effort, NBFCs have been able to bring the customers from the unorganized sector into the organized sector through the NBFC.
As a result of that, the sector has become corporatized. Because of that, banks are also finding it easy and good portfolios to lend. With a lot of effort, these people have come from the unorganized sector. If the NBFCs are limited through tweaks in the LTV, as suggested in the draft guidelines, it will take back these customers to the money lenders, which I do not think would be in the interest of the country, interest of the regulator. We have definitely flagged this to the regulator, and the association of gold loan companies has given representation on this aspect to them.
All the other aspects are quite good, quite good as strengthening the sector, especially in respect of new players coming into this sector, process, etc., harmonization, and the process, what should we say, clarity for the new sectors also in terms of these books. This will take it up to the regulator, and let us hear from the regulator what is their views, our views, not to disturb the sector and probably take back these customers to the unorganized sector. We have given our representation, so we'll wait for the final guidelines.
The second question was change in business mix or maybe more tilt towards non-gold.
No, we have not thought about that yet. We have a plan. Our core business is gold loan. We will continue to do gold loan.
Sure. Your points are very helpful. Thank you so much.
Thank you. The next question is from the line of Rajiv Mehta from Riyadh Securities. Please go ahead.
Yeah. Hi, sir. Good evening. Just two things. Sir, when I look at your quarterly run rate of new customer acquisition and your existing customer reactivation, in the last few quarters, the run rate has seemed to have fallen versus what it was in the first few quarters of the year. There can be some seasonality, but are we seeing that because as you pointed out, that there is increasing competition because of increasing gold prices and new players are entering the industry, are we seeing some pressure in terms of customer activation or old customer reactivation? This is why we need to step up on the ANC spend, business promotion expenditure, and even employee variables in that case. Is it slightly becoming a trade-off between keeping growth high and bringing other things on?
I think new customer additions in the last four quarters was around 4.5, 4.3, 4.17. There's not many. you're increasing by about four lines. Yeah. New customers are increasing.
Yeah, they are increasing, but the rate at which they were increasing in the first two quarters, that seems to have slightly come down.
That is only marginal. This is seen. When somebody comes and takes a loan, sometimes our customer might be borrowing for INR 10,000, and sometimes we might be coming and taking for INR 2,000,000 also. Anyway, there is good growth in the new customer acquisition quarter on quarter. Of course, as you say, the third quarter, second quarter, third quarter, almost INR 40 million every quarter, this should have done INR 40 million and plus extra. At least we are able to do that with a higher base also. We are quite happy with that.
No, and the second part of my question was whether to keep up with this current run rate of new customer acquisition, you feel the need to step up the operates in terms of ANC spend, business promotion spend, which are mainly your employee variables. Do you see that scenario? Or you would want to reserve your comment because you would want to also see whether what kind of draft guidelines come into play.
No, not because of the guidelines. We definitely would like to always like to increase our customer base. We have regular marketing activities. We have regular campaigns, etc., going. That is bringing us business. You should understand that gold loan is a very short period loan, and we have to be very quick to get newer and newer customers. Otherwise, the active customer base would not increase. As customers take back their gold, we get new customers also. As it is, we have campaigns, etc., which constantly we run. There is nothing cutting back on that or maybe nothing to do extraordinary also now.
Okay. Can you share things too for Belstar? What is the expected collection efficiency trend with Belstar? I can come back later.
Sure.
Thank you, and Belstar.
Thank you. The next question is from the line of Nidhesh Jain from Investec . Please go ahead.
Thanks for the opportunity. Sir, on the yields, how should we think about next year given that competitive intensity is increasing, reducing, and interest rates are also likely to decline? How do you see yields panning out next year and interest spreads panning out next year? Also, if you can share what is the incremental yield for Q4 FY 2025 on the gold loan business?
Yeah. Our interest spread has always been in the range of 9%-10%, and we will continue to maintain that. If the cost of borrowing comes down, after a while, after a quarter or so, we will reduce our yield. If the cost of borrowing is going up, we will increase our yield. We will try to maintain our spread between 9%-10%. That is what we always do. We will always do that, and we continue to do that. If the cost comes down, we will pass on the benefit to customers. If the cost of borrowing goes up, for some time, we'll try to absorb it. After that, we'll have to increase our yield. I think the interest spread would be constant.
Okay, sir. And sir, yields are broadly similar for Q4 also. The Q4, the incremental yields that loans that we proposed before the yields. Around 18.5%.
Yeah. 18.5% is what I've seen for all the quarters.
Okay. The second data keeping question is on Belstar. If you can share PAR0 plus as of March 2025 for Belstar.
Yeah. I'll come back on the Belstar numbers.
Sure. Sure. That's it from my side. Thank you.
Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead.
Yeah. Hi. Firstly, getting onto the draft regulations, based on your assessment, if you have to look at it maybe on the LTV side, have you done any analysis in terms of where actually we would have been breaching these norms of interest approval plus the principal at 75-odd percent, given that draft guidelines are there? No doubt it is still draft, but any internal assessment being done? Given your experience, is it like customers take a particular value of money, whatever they need, and they would be more willing to come and pledge the gold further rather than lowering the quantum of money required? Would that be the case based on your experience over so many years?
Second question, again, on the operational part of it, maybe in terms of the customer assessment, which I do not think we have done till date, maybe in terms of analyzing the repayment capability of the customers and even the documents with respect to the end use of the gold loans. Operationally, how would these things pan out? Would it be more like the documentation, mere documentation, and the self-declaration that would be required, or we would have a separate procedure to assess the customers as well? Yeah.
Only two questions.
Yeah.
Okay. The first question is about the draft guidelines and whether we have done a calculation on the impact of this. I do not think there is something great in that. I would also like to say that as of late, you also asked whether borrowers are borrowing. As of late, our loan-to-value from the current price is only 62%. It is only 62%, less than 62%. Today also, all the borrowers have not borrowed the whole 75%. They have all borrowed only 62%. There is.
Sir, that's what the question was. Maybe average is 62, but if we look at it, maybe any particular proportion of customers who would be more than 70-odd percent.
Impact assessment is simple. Somebody who was getting INR 75 earlier, under the new guidelines, he'll be able to get only INR 55.
Yeah. Got it.
There will not be any standardization in the industry. Somebody who is lending at 20%, it will be at 55. Somebody who is lending at 10, it will be 65. There will not finally, the consumers are going to get affected. He'll not be clear where he'll get an appropriate value for his ornament. That's what we have put up to the regulator. We have raised these concerns. Let us wait for that.
Yeah. So looking at R, we believe it should settle somewhere around 55%-60%-odd percent is what eventually it would settle at, maybe if you have to lend at the on an incremental basis.
Let the final guidelines come, and then we'll take a shot. Anyway, you know what is the impact, right?
Y eah. Got it.
Let's wait and see in which direction it goes. What was the second question?
No, on the operational part, because now customer assessment will also be required apart from collection.
I understood. Yes. Day by day, the compliance and operational costs are going up, not only for us, for all NBFCs, not only gold loan NBFCs, every NBFC. Operational expenses, operational costs, compliance costs will go up. We have to comply with that. Compliance costs will go up. That's all. What else can we do?
My question was, would it be like the self-declaration from the customer that suppose if we have to require the customer assessment, we will just take that this is the income which we are having, or this is the end use, or we will be deploying people to keep the evidence of it?
L et the regulations come. Whatever it is, we'll have to comply with. If it comes, we'll comply. The compliance cost will go. That's all. We'll have to comply with. At that time, we will cross that bridge at that time. Whatever it is, it will be complied. We'll wait for the final regulation. The point is, all this will add to compliance costs. That's all. As well as capital appreciation. Customer irritation. No, you said irritation. Yeah. Definitely.
Yes. Got it. Got it. Yeah. Thanks. Thanks, and all the best. Yeah.
There was a question on stage two in Belstar. Previously, Belstar, the stage two percentage is 3.17%, and NPA stage three is 4.98%.
Thank you. The next question is from the line of Shubhranshu Mishra from Philip Capital. Please go ahead.
I thank for this opportunity. The first one is on Muthoot Money. In terms of the branch expansion, we have just stopped short of 1,000, beyond which we might require regulatory requirements. I just want to understand what kind of gold loans we are doing, what is the total gold loan capacity of each of the branches that we have built out, what is the AUM per branch here, what kind of teams have we built in at Muthoot Money. If the regulator might look at this as saying that, "Look, you do not get regulatory approval until we increase branches here," can there be some kind of a regulatory oversight or action on Muthoot Money increasing branches rapidly? The second question is a data keeping question. What is the accrued interest, and what will be the AUM split? Less than INR 100,000, INR 100,000-300,000, and more than INR 300,000?
Network Money and Network Money gold loan AUM is INR 3,500 crore. I think we explained all in detail earlier also. When we started the higher association, we started the gold loan. It is around 980 or 990 branches, and the AUM is INR 3,700 crore. Because these are young branches, the business should be going up. Per branch business should be going up year on year. We do not see any regulatory concerns in this. That is the first part of it. The second part is your. Interest accrued is INR 1,740 crore. Ticket size data about realized is 38%. 1 lakh-3 lakh is 25%, and 50,000-1 lakh is 15%, and the remaining below 50,000 is 13%. Sir, what is the AUM per branch at Muthoot Money now?
3.5 crores. INR 3,500 million. Wait.
What's the maximum level it can go to? No, what is the average in Oommen Mammen, right?
It can go up to that level. Why should it go?
It can go higher also.
Should I average? There's no difference between the branches and there's no difference between branches of Muthoot Money. Only the management is different. I mean, the operational team is different.
Understood. This is very helpful. Thank you so much.
Yeah.
Management is different, operational team is different.
Thank you. The next question is from the line of Mona Khetan from Dolat Capital . Please go ahead.
Yeah. Hi, Sujati. Firstly, on the.
Little louder, please. Little louder, please.
Yeah. Is it better?
Yeah.
Yeah. Firstly, on the other income, it's a lot higher this quarter. Any particular thing that's driving it? I don't think. Non-interest income?
Not really. Maybe some.
Is it driven by the ARC?
Yeah. So when ARC is there, then the investments and mutual funds, etc., which are value changes, then yeah, that's all.
Is that transaction complete? I mean, are the entire recoveries from the ARC trade now reflected in the P&L in our case?
No. Somewhere else.
Okay. And coming to Oommen Mammen, what is the gold AUM of this INR 3,700 crore or so, and what was the same last year, if you could highlight?
Last year, it was INR 1,000 crore. Today, it is INR 3,700 crore.
The entire AUM consists of gold loan only?
No, no. There was hire purchase, which is about INR 500 crore at its peak. It is running down, and probably today it is about INR 150 crore.
Okay. So INR 500 crore last year and INR 150 crore as of today, as of March end. Is there non-gold portfolio in the Muthoot Mammen group?
Yeah.
Got it. Thanks so much. That's all from me.
Thank you. The next question is from the line of Varun from Kotak Securities. Please go ahead.
Hi, sir. I just had two questions. First one was with regard to our different products at different NBFCs. So what is the yield difference that we offer to the borrower for the different NBFCs, like the 25% or 65% and the 50%? The other question was with regard to Belstar collections in Tamil Nadu. We have a large portfolio over there. Are we seeing any impact of the new bill or act that has been passed in the Tamil Nadu assembly?
Yield difference, we have schemes right from 10%-` 22%. There is no hard and fast rule. It operates in different geographies, in different schemes, etc. There is no particular principle being followed. It is mainly dependent on the schemes which have been decided to run. The second thing is on the impact on Belstar. I think that ordinance.
Started with Karnataka, now it is in Tamil Nadu.
No, there will be some impact in the initial stages. Then it becomes applicable to everybody in the sector. We will have to wait and see.
Is it not applicable to NBFC or MFI?
Technically, the act is not applicable to NBFC and MFI. It is actually expensive technically, but then it is only the perception. People on the ground may see this is applicable for everybody, and people may delay payments. After some time, it has to come. As per the rule, as per the act, both in Tamil Nadu and in Karnataka, the NBFCs, regulated NBFCs, MFIs are exempted. The ground level is always a problem.
Yes. I was just asking about the collections trend in April or in.
That's what Kuman said. Initially, there will be some hiccup. After some time, it has to straighten up. Today, there is a hiccup.
Thank you. The next question is from the line of Harshith from PNG Invest. Please go ahead.
Hi, sir. Thank you for the follow-up. This is just on cost of funds. We look at sequentially our cost of funds increase, but I'm assuming that the rate cut narrative has started building up. Just wanted to get some sense on the trajectory of cost of funds and the quantum drop guidance, if you can.
I think there is a significant reduction post-March. We are seeing a significant drop in the borrowing costs. I think now we should see and get the benefit of that fall in interest costs unless there is a reversal of the trend.
Okay. Got it. Got it. And some bit of spread improvement, you should probably see some next quarter onwards as it.
Yeah. Again, the same thing I used to mention when there is an increase. If we put basis points increase and all, it does not make much of a difference in our return asset. The same thing. When there is a decrease in cost of borrowing, it is not going to make a significant change in our return asset. On a 5,500% return asset, this is not going to make a material impact.
Understood. Okay, sir. If I can just clarify one more time, it was not clear on this part that our restriction of 115 approval is in both Muthoot Mammen and Muthoot Finance.
No, then 115 is for Muthoot Finance. 115 permission branch is for Muthoot Finance. Muthoot Money, we just completed 1,000 branches. Allow it to grow because it has a long way to go with the 1,000 branches. Probably at a later stage, we can always seek approval from RBI.
Fair point. Fair point. Understood, sir. Thank you.
Thank you. The next question is from the line of Navesh Davani from Swann Investments. Please go ahead.
Thank you for the opportunity. The question was on the standalone P&L where we have seen provisions going up materially. In a scenario where both sides are favorable, one just wants to understand the reasoning behind that. If you can provide some sense that whether the provisions that we hold today, that will be sufficient to kind of handle a possible correction in gold price, and/or will continue to provide significantly in 2026 as well. The second one was on Belstar. If it is possible to share some PAR zero data for the last couple of months, that would be helpful.
Firstly, on provisions. The provisioning is based on entire 109. There we consider the historical losses, etc. and based on that, we make provisions. Now, we believe that that will be an adequate provision. Whether there could be a very large movement, that is not the way in which we are looking at gold prices. From that perspective, I think we feel that now the provisions are adequate. What is the second question?
Belstar. Monthly collection. Monthly or withdrawn?
Monthly withdrawn. I mentioned earlier, stage two percentage on Belstar is as of March 31, is 3.17%. Stage three is 4.98%.
Any numbers you can share for PAR zero level share?
No, I don't have the PAR zero numbers right now.
Okay. So going back to your response on provisions, for 2024, the provisions translated to something like 30 basis points, whereas for 2025, it translated to around 80 basis points. You mentioned that we are following the UCL method. What are those key changes in the UCL assumptions which led to this kind of increase?
I think I gave earlier, I gave a breakup of ECL provision. Out of INR 766 crore of ECL provision, INR 130 crore is because of the write-up, and the remaining is because of the increase in ECL provisions as well as increase in NPAs of the non-gold book. Increase in provisions because of the non-gold book is about INR 200 crore. The remaining is because of the increase in the loan book.
Wonderful, sir. That helps.
Thank you. The next question is from the line of Nikhil S. John from GYR Capital Advisors. Please go ahead.
Is that audible too?
Yeah.
Hello. Yes. Thank you for the opportunity and the congratulations on crossing 1 lakh crore milestone. So my first question, with the gold loan AUM of 41% year- on- year, and interest income rising to 56%, do you see any structural margin expansion in the FI releases, especially with operating leverage taking in from the age 50 new branches now built?
That's your question. I think we have said that our interest spread is about 9.5%. It is last all quarters, it has been 9.5%. If our cost, etc., overall cost comes down, we will reduce our yield, but of course, maintaining the interest spread. Operating cost, yes, it cannot come down because of the per branch which is going up. As you know, inflation is also there. Everything will go up. The rent will go up. Salaries will go up. On one side, that will go up, but then that is compensated by more per branch. I think operating cost, etc., would also remain almost the same.
Okay. I have one more question for you. Is there any internal benchmark that you have set to improve this metric further before adding more branches?
Benchmark? I didn't understand the question. Please.
Any internal benchmark or KPIs that you have implemented in every branch to be followed?
Mark is that we ask them to do more per branch business. I think that's the benchmark we give to the branches. Individual branch business should go up. That's the benchmark.
Okay. Thank you. Thank you, sir. Thank you.
Thank you. The next question is from the line of Gino Thomas from IND Invest. Please go ahead.
Hey, good evening, sir. Congratulations for a great performance. Sir, I think I'm audible.
Yes.
I'm very happy to see slide number 20- 25. Probably I myself have spoken about this probably a couple of quarters back. I request you to give some color on these analytics initiatives, centralized, many, many innovations coming there in the company. Maybe for cross-sell, cost efficiency, etc., it would be the objective. It would be a great help if you can give some color on that.
I think it's already colored red, Sanjith, on the right-hand side. Of course, these are all steps we are taking to improve the performance of the branch, to improve the customers, more customers coming to the branch. These are just steps we have already taken. Some of them are in process. Some of them we have already implemented. Sure, going forward, these steps should certainly give more customer footfalls in the branch and definitely improve the business. Everything, almost what we said, is self-explanatory that we have done. I don't want to go into each detail because I don't have each detail, etc., but understand that these are things which we have been implementing for the last one or two years. It's just that we just put it on paper now. These are all meant to get more customers to the branch.
Okay. Thank you so much, sir. Wish you all the very best for FY 2026. Thanks for that.
Thank you. Ladies and gentlemen, in the interest of time, this would be our last question. I would now like to hand the conference over to the management for closing comments.
Thank you. We had a good interaction with all the team members, all the investors, and our supporters. Sorry that there was some disruption in the connection. I think it was mainly because there is some problem in the Airtel portal network in Tamil Nadu and Kerala. I think we took a second alternative, and it has gone well. We are happy that we were able to report good numbers, and we are again happy that we are able to support our customers and also our investors. We will continue to do that going forward, continue to work in the best interest of all our stakeholders, including our borrowers, lenders, our investors, and be confident that Muthoot will stand by all its values and principles and see that we grow from strength to strength so that all our stakeholders are benefited. Thank you. Goodbye from Muthoot Group here. Thank you.
Thank you. On behalf of Muthoot Finance, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.