Manappuram Posts 58% Jump In Profit On Healthy Gold Loan Business

India's Manappuram Finance Ltd reported a 58% jump in quarterly profit on Friday, helped by strength in its mainstay gold loan and micro-finance businesses.

The non-banking financial company's consolidated net profit rose to 4.13 billion rupees ($50.50 million) in the January to March quarter, from 2.61 billion rupees a year ago, it said.

 

The company's interest income jumped 23% to 17.14 billion rupees, while expenses rose a comparatively smaller 8.3%.

The Thrissur, Kerala-based company's pre-tax profit from gold loan business, which accounts for three-fourth of its total profit, increased 16% to 4.22 billion rupees.

 

Meanwhile, its micro-finance division posted a pre-tax profit of 1.44 billion rupees, versus a year-ago loss.

However, Manappuram's gold loan assets under management declined 2% year-on-year as higher gold prices meant borrowers needed lower collateral to borrow money. Its gold loan customers portfolio increased 0.4% year-on-year.

 

The results come as the gold loan financier's promoter and Chief Executive Officer V.P. Nandakumar faces a probe related to a private company he owned. India's enforcement agency last week froze Nandakumar's assets, including the company shares he owns.

While Nandakumar has said the enforcement action is not linked to Manappuram, the company's shares have tumbled 15% since May 3, when the probe was announced, and prompted rating agencies to flag reputation and credit risks.