Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Manappuram Finance Ltd (BOM:531213, Financial) reported a net profit of INR 572 crores for the quarter, indicating financial resilience.
- The company's consolidated assets under management (AUM) grew by 17.4% year-on-year, reaching INR 45,716 crores.
- The gold loan business, which constitutes a significant portion of the AUM, saw a 17.1% year-on-year growth.
- The company has implemented advanced tracking systems to improve collection efficiency, showing positive signs.
- Manappuram Finance Ltd (BOM:531213) has a strong capital position with a capital adequacy ratio (CRAR) of 29.22%.
Negative Points
- The microfinance subsidiary, Asirvad Microfinance, faced a ban on disbursements due to regulatory issues, impacting its operations.
- The company's standalone gross non-performing assets (GNPA) increased to 2.42% from 1.96%, indicating asset quality concerns.
- Higher credit costs have affected profitability in certain segments, particularly in microfinance.
- The vehicle finance segment saw a rise in GNPA to 4.2%, reflecting challenges in asset quality.
- The company is facing challenges in collections due to climate-related disruptions and economic conditions in rural areas.
Q & A Highlights
Q: What is the current interest rate for Asirvad Microfinance, and what changes have been made?
A: Asirvad has stopped lending from October 22, but we have assured the RBI that our interest rate will be one of the lowest in the industry. We have complied with all RBI requirements and are awaiting their inspection. - Vazhappully Nandakumar, CEO
Q: Why has there been a sharp increase in the number of loan officers?
A: The increase in loan officers is primarily for collections, especially in geographies facing challenges. The industry is focusing on organizing group-level meetings to improve collections. - Vazhappully Nandakumar, CEO
Q: What impact do the new RBI guidelines on gold loans have on your business?
A: The guidelines create a level playing field by imposing the same rules on all lenders, including fintechs. This should reduce competitive intensity and allow us to grow at a projected rate of 12% to 15% annually. - Vazhappully Nandakumar, CEO
Q: Can you provide details on the provisions and write-offs for standalone and Asirvad for this quarter?
A: The total provision for standalone is INR91 crores and for Asirvad is INR270 crores as of September 30. The write-offs for the quarter are included in the presentation. - Bindu A.L., CFO
Q: How are you addressing the RBI's observations on microfinance and gold loan businesses?
A: We have addressed issues related to pricing policy, income assessment, and gold purity differences. We have submitted our compliance plan to the RBI and are awaiting their inspection. - Vazhappully Nandakumar, CEO
Q: What is the expected impact of the RBI's guidelines on gold loan rollovers?
A: We are seeking clarity from the RBI on practical challenges related to rollovers. We aim to comply fully with their guidelines, which should enhance stakeholder confidence. - Vazhappully Nandakumar, CEO
Q: What is the current status of Asirvad's Tier 1 capital, and are there any concerns from lenders?
A: Asirvad's Tier 1 capital is at 17%. Lenders have not shown discomfort as they understand our liquidity position and regulatory compliance efforts. - Vazhappully Nandakumar, CEO
Q: What are the collection trends and credit cost guidance for microfinance?
A: Collection trends are similar to the industry, with some stress in certain geographies. We expect credit costs to be on the higher side due to recent challenges but are working to improve collections. - Vazhappully Nandakumar, CEO
Q: How will the changes in gold loan and MFI portfolios affect long-term growth and ROA?
A: We expect a growth rate of 15% to 18% with a focus on secured loan portfolios. The regulatory changes will create a level playing field, benefiting the industry. - Vazhappully Nandakumar, CEO
Q: What is the status of the ECB raised during the quarter?
A: The ECB has an all-inclusive cost below the line and a tenure of three years. - Bindu A.L., CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
