Muthoot Finance cost of funds may go up by 10-15 basis points; to come down after 1-2 quarters: George Alexander Muthoot
George Alexander Muthoot, MD, Muthoot Finance, says: “If there is pressure on the borrowing cost, we will be passing it on to the borrowers because our borrowers are not that much interest sensitive and if all over the place the interest rates are going up for all sorts of loans, then the customers would understand that gold loans are also becoming more pricey. For that, we would be able to maintain our spread and margin at 10% and 11%.”There has been a sharp spike in your cost of funds that have put margins under pressure. Was this on expected lines and can you walk us through the outlook or the reasons for your margin compression?The margin has not really compressed.
It is still hovering around the 10% margin. The margins are in the spread of 10 and 11. That is something which we plan to continue going forward also.
If there is pressure on the borrowing cost, we will be passing it on to the borrowers because our borrowers are not that much interest sensitive and if all over the place the interest rates are going up for all sorts of loans, then the customers would understand that gold loans are also becoming more pricey. For that, we would be able to maintain our spread and margin at 10% and 11%.What happens to your cost of funds and spreads in FY24 given that rates seem to have stabilised at least for now?It is almost stabilising because it has not reached this bottom. But I am sure it may not go up much going forward.
Cost of funds probably may go up 10-15 basis points only, that is what my gut says. But it may not come down quickly. Probably another one or two quarters later, it will start coming down.Why has your asset quality deteriorated? Provisioning has inched up marginally. The asset quality has never
. Read more on economictimes.indiatimes.com
