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Informist, Saturday, Aug. 1, 2026

By Divya Moolayattil and Pratiksha

MUMBAI/NEW DELHI – Muthoot Finance Ltd. expects yield on average loan assets to rise slightly to 18-18.5% going forward this year, the company's senior management said during the post-earnings analyst conference call. The company also said the current yield is close to a sustainable level after an unusually strong performance last year. The company's interest income on average loan assets for the June quarter was at 17.93%, down from 19.56% a year ago and 20.76% a quarter ago.

The officials said that the moderation in yields was due to a higher share of lower-rate loans, lower lending rates during the quarter, and a high base from the previous year, when strong recoveries and loan renewals had led to a rise in interest collections. The management added that more than 20% yields seen in 2025-26 (Apr-Mar) should be viewed as a "windfall". The company added that they had consciously moderated yields to support growth in its gold loan book and expects yields to remain around current levels going forward.

The company also said they don't expect the cost of borrowing to fall this year, unless the Reserve Bank of India makes changes to their benchmark interest rates. Muthoot Finance said there is significant growth potential for its gold loan business in northern, eastern and western India, even as 70% of its gold loan market is concentrated in the southern India. However, its gold loan operations are gradually increasing in other parts of the country, giving more room for further expansion in north India, which is a less penetrated market. 

Muthoot Finance said it has no special strategy to counter rising competition in the gold loan segment, but it will rely on its strong brand presence, rather than altering its pricing or branch expansion strategy in response to competitors. "There is no single thing that keeps me worried about competition. It's just that we need to do better and better. We need to be one step ahead of everybody in competition. And more than being one step ahead, we need to continue to get the customers' trust. This is a trust business. Then everything else is passing," the company management said. 

These comments come at a time when a lot of non-banking financial companies have started boosting their gold loan business. Aditya Birla Capital Ltd. announced Friday that it is foraying into the gold loan business and plans to open around 200 to 300 gold loan branches in 2026-27 (Apr-Mar). 

Muthoot Finance said it plans to open 200-250 branches in FY27 as part of its expansion strategy, while on a consolidated basis, it is expected to add 500-600 branches. The company said branches will be opened in locations where demand for gold loans is expected to be strong. At present, the company has a total of 7,654 branch offices spread across India with an average gold loan assets under management per branch at INR 324.7 million as on Jun. 30.

The Kerala-based gold financier reported a net profit of INR 25.50 billion for the June quarter, up nearly 25% on year, but down 17% sequentially. The net profit for the quarter missed analysts' estimates by nearly INR 6 billion.

Friday, shares of Muthoot Finance closed 3.69% higher at INR 3,119 on the National Stock Exchange. End

Edited by Deepshikha Bhardwaj

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