Manappuram Finance, a gold loan lender, managing director VP Nandakumar said that they are predicted to estimate its loan growth rate to 20% as they continued to small lending and affordable housing loans with raising unlock of the economy. He added that the gold loan business will catch the highest traction and the company has made capital allocation.
This pandemic situation creates a great impact and looking forward to getting into a normal routine. There is a rise in demand for gold loans. As a result, gold loan business will reach the highest growth as economic activities throwback to normalcy said, Nanda Kumar.
The company has undergone digital infrastructure to control strong positioning in the online platform of a gold loan. Kerala reported a 30% year-on-year increase in gold loan portfolio to Rs 19,736 crore from Rs 15,168.34 crore the last year. Manappuram’s microfinance subsidiary Asirvad Microfinance saw a 5% increase in assets under management to Rs 4,971 crore. It also has an interest in affordable homes, motor vehicle, and equipment finance segments.
Nanda Kumar said that non-gold loan disbursements, which do not exists in the first three-four months of the lockdown periods have now started picking up. IDBI Capital Equity Research said that 2% repayments by micro-finance borrowers were collapsed in April and have gone past 85%. However, about 9% portfolio of MFI has not paid a single EMI, which needs to be monitored out for credit cost in H2FY21.
Manappuram Finance with about 73.4% of AUM towards gold loan portfolio should be better off however non-gold portfolio remains upsets, which needs to be tracked closely, and the company has the capacity to deliver 20%+ ROE driven by ROA of 4%+. Spreads and operating leverage are also expected to augur growth in P&L.
Manappuram had gold holdings of 68.83 tonnes at the last of September. Gold jewelry kept as collateral against gold loans by Muthoot Finance, Muthoot Fincorp and Manappuram Finance totaled 298.8 tons at end of FY 2019-20 reported by the World Gold Council. He said that they will resume as an NBFC which turns to a different customer segment as compared to commercial banks and the cost of setting up a bank offsets the benefit of setting up one in terms of the access to low-cost deposits.