breaking news Gold lending activity rises at high price, expect same growth trend over coming quarters: Muthoot Finance

Gold finance activity has seen significant growth since November 2022, resulting in a strong fourth quarter, George Alexander Muthoot, MD at Muthoot Finance said in a conversation with CNBC-TV18. The positive momentum continued due to rising gold prices, which further facilitated gold lending, he said.

“Favorable market conditions have contributed to the company’s success, leading to strong expectations for continued growth over the next four quarters,” he told CNBC-TV18.

Rising gold prices not only benefited the company by increasing the value of collateral, but also made gold loans more attractive to borrowers.

“We are seeing good growth in gold lending activity mainly because economic activity has also started to pick up and that is one of the main reasons why activity has increased,” Muthoot said.

Looking ahead, Muthoot Finance expects to maintain the same growth trend over the next four quarters. The company is confident in its ability to maintain this positive momentum and capitalize on market opportunities.

Gold prices edged higher on Monday as people worried about the US debt limit and comments from the head of the Federal Reserve. Gold is considered a safe investment, so more people wanted to buy it.

The price of gold in the spot market rose 0.1% to $1,978.06 per ounce, and the price of gold for future delivery in the United States edged down 0.1% at $1,979.40.

In addition to its gold finance business, Muthoot Finance has introduced a new personal micro-loan program for its existing clients. This plan aims to provide greater financial flexibility and support to its customers.

Muthoot Finance expects its net interest margins (NIM) to stabilize in the 10-11% range going forward. Going forward, Muthoot Finance forecasts a loan growth rate of 15% for this fiscal year.

Muthoot Finance has also focused on its home financing division. Although it experienced a downturn earlier, the company expects to bounce back and reach an assets under management (AUM) of Rs 1,900 crore for its home finance segment by FY24.