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Muthoot Microfin Set to Exceed 20% Loan Growth Target as Funding Costs Plummet
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CNBC TV18•25-09-2026, 15:17
Muthoot Microfin Set to Exceed 20% Loan Growth Target as Funding Costs Plummet
- •Muthoot Microfin anticipates beating its 20% loan book growth target and expects profit to rise over 25% from the previous quarter due to falling borrowing costs.
- •The company projects its overall cost of funds to drop below 10% by the end of the quarter, aiming for 9.75% long-term, driven by a 75 basis point reduction last fiscal year and further cuts this year.
- •Loan growth is boosted by new products like individual loans, gold loans, and loans against property, with gold loan disbursements reaching nearly ’130 crore monthly.
- •Muthoot Microfin expects non-JLG lending to comprise about 35% of its loan book by year-end, shifting its mix to roughly 65:35.
- •Asset quality has improved significantly, with gross non-performing assets falling to 3.7% and a target to close below 3%, while net interest margins are expected to remain around 12.5%.
Key Questions Answered
Muthoot Microfin expects to beat its 20% loan book growth target for the quarter, while profit could increase by over 25% from the previous quarter as borrowing costs fall faster than anticipated.
The company reduced its funding costs after raising ₹250 crore through non-convertible debentures (NCDs) at a 9.25% annual coupon following a credit rating upgrade.
Gross non-performing assets have fallen to 3.7%, and the company is targeting to close the period below 3%, aiming for around 2.7% to 2.8% with net NPA below 1%.
