A recent press report said that the Gold loan company Muthoot Finance has reported a net profit of 88 per cent to Rs.215 crore for the second quarter ended September 30, 2011 which was Rs.115 crore during the same period last year.
The total income of the company which was Rs.529 crore during the second quarter of the previous fiscal year rose to Rs.1105 crore this year in the second quarter. The retail loan asset management rose by Rs. 2,991 crore to Rs. 20, 940 crore.
In his statement Mr. George Alexander Muthoot, the Managing Director of Muthoot Finance said that the cost of borrowings had been increased on account of the rate hikes due to inflation and the impact of loss of priority sector funding status. There had been no other option except for passing on this increasing cost to their borrowers. In spite of this high cost customers prefer this mode of borrowing to be convenient as it seems to be quick and transparent and hence the demand for gold loan increased thereby resulting in a good profit.
Muthoot Capital Services Ltd has also reported a net profit of 34.87 per cent to Rs. 338.14 lakh during the second quarter this fiscal against Rs. 250.71 crore during the same period last year.
Earlier a report said that the Muthoot group, well known for its gold loan segment has planned to set up a new company, Muthoot Housing Finance which will provide home loans and complete subsidy of Muthoot Fin.Corp.