Muthoot Finance Limited (NSE: MUTHOOTFIN) Q4 2025 Earnings Call dated May. 14, 2025
Corporate Participants:
George Alexander Muthoot — Managing Director
Unidentified Speaker
Analysts:
Rati Pandit — Analyst
Abhijit — Analyst
Harshit — Analyst
Shreya Shivani — Analyst
Shweta — Analyst
Rajiv Mehta — Analyst
Nidhesh Jain — Analyst
Kunal Shah — Analyst
Shubhranshu Mishra — Analyst
Mona Khetan — Analyst
Varun — Analyst
Unidentified Participant
Bhavesh Kanani — Analyst
Nikhil S. John — Analyst
Jino Thomas — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Finance Limited Q4 and FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded.I now hand the conference over to Mr Rathi Pandet from Nirmal Bang Equities. Thank you, and over to you, ma’am.
Rati Pandit — Analyst
Thank you, Amshar. A very good evening to everyone. On behalf of Nirmal Bang Institutional Equities, we welcome you all to the three — 4Q FY ’25 earnings conference call of Motors Finance Limited. We are pleased to host the senior management of the company, represented by Mr George Alexander, Managing Director; Mr Alexander George, Whole-Time Director; Mr George M Alexander, Whole-Time Director; Mr George M. George, Director; Mr George M. Jacob, Whole-Time Director; Mr Alexander , Executive Director; Mr Bijimon, Executive Director; and Mr Oman K Mahamin, Chief Financial Officer. I now hand over the call to MD, sir, Mr George Alexander for his opening remarks, post which we can have the floor open for Q&A. Thank you, and over to you, sir.
George Alexander Muthoot — Managing Director
Thank you and good evening to all. Today, Finance held its Board meeting for the financial year and financial year ’25 as well as for the quarter-four of the last year. The Board meeting has just got over and we have declared the results and I’m sure it is available for you all. I would like to speak of some of the highlights of this year’s performance.
We have had the highest-ever consolidated loan AUM of INR1,20,000 crores as on March and also the highest year-on-year growth in AUM of INR33,000 crores, which is about — which is 37%. The consolidated profit-after-tax stands at INR5,352 in this year, it is up by 20% year-on-year. The standalone AUM stands at INR1,88,000 crores and the historic year-on-year growth in loan AUM of INR32,132,800 crores. The standalone profit-after-tax stands at INR5,200 crores.
It is up by 28% year-on-year. Regarding the gold loan per se, the gold loan AUM of Finance stands at INR1 lakh 2,956 crores, which is certainly a historic moment for us since we have reached the INR1 lakh crore market and the highest year-on-year growth of gold loan of 30,000, which is again 41% of the previous year’s growth. Finance has declared a dividend for the last — for the year, which is 260% on the face value or INR26 per equity share.
During the year, the Group opened 850 new branches and S&P Global Rating has upgraded Finance Limited’s long-term issuer credit rating from BB to BB plus with a stable outlook. Rating has also upgraded the long-term issuer rating of Mututh Finance from BA2 to BA 1 with a stable outlook. We have had INR15 1.5 crore downloads in the app and Finance is the only pure-play go NBFC in the upper layer NPFC’s classifications with the Bank of India for three years in a row.
We have received very other recognitions, etc. Coming to the subsidiaries, the Belstar Finance has opened 57 branches in the last year and the business and has generated a profit-after-tax of INR46 crores in-spite of the turbulent year for the microfinance sector. Stage-3 loans assets under — at 4.98% is in-line with the peers.
Home Finance, the loan AUM stands at INR2,985 crores versus INR2,000 crores in the last year, a growth of 47%. The loan disbursal of INR1,242 crores in this year compares with INR815 crores of the previous year. The interest income also increased from — increased to INR273 crores from INR178 crores and the profit-after-tax stood at INR39 crores for this year versus INR18 crores in the previous year.
The GNPA at 1.1% in financial year versus 1.88 in the previous year and the net NPA at 0.46 versus 0.57 in the previous year. Money, the loan AUM stands at INR3,903 crores versus INR1,100 crores last year, a growth of 248%. The branch network increased to 992 from 470 last year. We are proud to announce that this year we crossed the historic milestone of INR1 lakh crore gold loan AUM, reaching INR102 lakh crores and all other things which I said definitely has been good for the company.
And we see good — good performance, we should see good performance in continuous also. So with that, I think I will close my opening remarks and we will — sorry, there is the Sri Lankan — Sri Lanka company has also done well. As on March, the total holding in total business has finance stood at our total holding is at 9.6 crores EQTI shares representing 72% of the company and the company has also done well.
The company’s profit has been quite good last year also AUM stands at INR3,133 with a total revenue of — sorry to interrupt, sir, but your voice is coming. There is a static in voice. Okay. Yeah. The Ashi Asset Finance. Ashi Asset Finance, we hold 72% stake. The total revenue increased to INR600 crores.
Operator
So there is still some disturbance in the line. Yes, I’ll rejoin you to the conference ladies and gentlemen, we’ll rejoin the management back online with us. Please stay connected ladies and gentlemen, we have the management back online with us. Sir, you may proceed.
George Alexander Muthoot — Managing Director
For Belstar Micro Finance Limited, the total revenue increased to INR2,125 crores as against INR1,851 crores previous year with a year-on-year increase of 15%. The loan AUM stands at INR7,970 crores and it achieved a net profit-after-tax of INR46 crores in the financial year. Utood Insurance also had a premium collection of INR589 crores and a profit-after-tax of INR166 crores for this year.
Asia Asset Finance has also done well. It has achieved a profit-after-tax of INR3,44 crores in the last year. Money, which is also a whole wholly-owned subsidiary of Finance has a total revenue of INR432 crores as against INR126 in the previous year and it achieved a profit-after-tax of INR12 crores for this year. I think with that, I will conclude my opening remarks and leave the floor open for your questions and clarifications.
Questions and Answers:
Operator
Thank very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one. If you Wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.The first question is from the line of Abhijit from Motilal Oswal. Please go-ahead.
Abhijit
Yeah, good evening, everyone, and thank you for taking my question. Sir, first of all, congratulations on a very strong year. So my question also lies there. Obviously, sir, the gold prices have helped during this year, but I mean, not to take any credit away, but just trying to understand two very, very strong years, FY ’24 and FY ’25, how would you look at gold loan growth for this year and the next year? And the related question on gold loans. Sir, what we have seen in this quarter is, I think, I mean the entire industry has done well and because of which there has been no aggressive competition or at least it is not reflecting in the yields. So just trying to understand, I mean, if you could just explain the competitive landscape as well. Is there enough for everyone or is the pie itself becomes so big that everyone can comfortably achieve at that and there is no need for, I would say, aggressive pricing at this stage.
George Alexander Muthoot
So regarding your question on the — like next year’s the guidance, year-on-year, we have always been giving a guidance of 15%. I don’t think we want to change that. We will continue to do the minimum growth guidance of 15% for this year also. But going-forward after quarter two, we should think of maybe if there is any need to revising the guidance.
So we have been always guiding at 15%. Of course, last year we have grown by 41%, but that part, we from our side like to a very conservative guidance of 15%. Now you yourself said the competitive landscape is there. But yes, I agree with you, the pie has increasing. It is increasing because more-and-more people are now looking at using or using the gold or monetizing their ornaments to take a gold alone.
And that is what is attracting new players into this market. And I’m sure if many of the gold loan companies have grown business and also the bank. So the pie is increasing. Nobody has degrown, everybody has grown only from the banks have grown. NBFCs have grown. I think the market is mature, not made — if the market is widely, I think I agree with you.
Abhijit
Got it, sir. And sir, I mean, then the other thing I wanted to understand is we would have all gone through the draft goal lending guidelines that came out. One of the key things which was highlighted in this gold lending guidelines was also the fact that LTV needs to be maintained at 75% throughout the which most of the NBFCs, I would say were not doing earlier because there was no regulatory requirement to do that.
Now if this draft guidelines actually — if it actually translates into final guidelines, just trying to understand if you have had a chance to work on this, trying to understand what could disbursement LTVs look like going ahead if these draft guidelines actually get margin actually translate into final guidelines.
George Alexander Muthoot
Okay. First of all, the draft guidelines have come. Everybody has gone through it. I’m sure everybody has credit and also have got their own opinions on it. The last — the last date for submitting the last guidelines was yesterday. So we, along with many others have given their suggestions, we should wait for the regulator to come up with the final guidelines.
Having said that, our take on this or my take on this — our company’s take on this would be, I feel that there is lot of things happening in the gold and gold loan market. Gold prices are shooting — shooting up. In the last one year, it has gone up by more than 50%. So that again the gold price and the jewelry price and the gold price is one factor of it.
Second factor, we have seen in the last one year, quite a few players have started coming into this. Most of the banks who were not very keen on this in the last one, two years have started becoming very keen. So there is lot of activity in the gold loan sector from the NBFCs from quite a few new players coming into this. Coming into this has always attracted regulatory oversight or regulatory concern.
Operator
So sorry to interrupt, sir, but your audience again cracking up.
George Alexander Muthoot
Can’t hear at all.
Operator
Now I can hear you, sir.
George Alexander Muthoot
Okay. No, I’ll look exactly on the mic and speak. Okay. So the regulatory guidelines are special definitely a reaction or action from the regulator when many new players start coming into this. So a good part of the new draft guidelines are to harmonize the processes which are followed, which are to be followed by the NBFCs.
So gold loan NBFCs, maybe the old gold loan NBFCs like us have been following all these things, but I’m sure the regulator is not sure whether all the new
Operator
Sorry to interrupt again, but yeah, again it’s breaking up right now.
George Alexander Muthoot
So the news.
Operator
So you’re not audible. So hello, are you there? Yes, sir, there is a problem in your connection, I guess
George Alexander Muthoot
You want to
Operator
I’ll dial-in, sir in the management ladies and gentlemen, we have the management back online with us. Sir, you may proceed.
George Alexander Muthoot
Okay. So the question was about the regulatory — new regulatory draft guidelines. Can you hear now?
Operator
Yes, sir. You are cloud and clear.
George Alexander Muthoot
Okay. So the new regulatory guidelines we feel or feels is mainly coming from the RBI or the regulator because new players are entering into the market and the gold price is also going up very fast, in fact 50% in the last one year. This is this is certainly raising some red flags or maybe concerns with the regulator as to how this is going to pan-out.
A similar thing happened in 2012 when many new players started coming into this whole loan market and that time also the regulator came out with some regulations or similar regulations, which finally culminated in a guideline or a report from the commission, the KUB route commission, which was again implemented and that is that implemented regulation is what is happening now. But what is happening is the new players who are coming may not be familiar with the processes, nuances of gold loan and that is what this regulation mainly tries to harmonies.
The second question is why when the gold prices, etc., are going up and new players are also going up, whether the regulators should Look at maybe tweaking the LTV, etc. So they have given some guidelines on that, some draft guidelines on that. There are a few pain points there, especially with the LTV, et-cetera, which is different for NBFCs and banks which as an association of gold loan companies, the association has taken-up with the Reserve Bank of India and certainly asked for a — for a personal hearing also on this and we are yet to hear from there. Other than that, the regulations are quite good, quite useful for the — for the sector. And I’m sure with these regulations being — coming into place and the few concerns which we see being set right by the regulator, I think this is going to be a good time for the NBFC gold loans.,
Abhijit
Sir, this is useful. And just one last follow-up. Sir, in, we have started doing gold loans now and we’re seeing good traction as well. Just trying to understand, is there anything differently we are doing in money or this is more an extension of the parent entity Finance?
George Alexander Muthoot
Money started as a hyperches number of, two used vehicles, four-wheelers, two-wheelers, etc. We had a portfolio of about INR600 crore INR700 crores at one-time, three years — soon after that pandemic came and thereafter also, we started seeing stress in that. And finally, we were not able to really jack-up that business.
Now we are slowly winding down that business and at that time when the business was coming down, we start of foraying into gold alone, which is certainly the group’s strength. And today we are doing concentrating mainly on gold alone and the hypurchase — hypurchase portfolio is actually running down. Today, we have — so you asked about the processes?
No, the process are the same because the management is the same, but different set of many — CEOs, different set of branches, different set of people. But of course, the brand is there and the portfo the processes are same as finance.
Abhijit
Got it, sir. That’s all from my side. Again, congratulations on a strong quarter and I wish you and your team best you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference, please limit your questions to two per participant. The next question is from the line of Harshit from Premj Invest. Please go-ahead.
Harshit
Hello. Hi, sir. Am I audible?
George Alexander Muthoot
Yeah, you are audible. Yes.
Harshit
Yeah. Sir, the first question was on the Stage 3 and the credit cost. If you can help us break-through the Stage 3 within the gold and in the non-gold loan portfolio.
George Alexander Muthoot
Yeah. Yeah, please.
Unidentified Speaker
Stage 3, I know loans on gold loan will be about INR3,400 crores.
Harshit
Okay.
Unidentified Speaker
Three years will be non-gold, about INR300 crores will be non-gold.
Harshit
Understood. Understood, sir. Sir, I think the question was that when we look at this credit, this year’s credit cost, I think it’s slightly elevated versus the previous few years. And if we try to slightly break-down, then 50% of the credit cost would be from non-gold loan, if I’m reading it correctly.
Then wanted to just get your thoughts that going-forward, how should we look at this book, because it’s already 5% of the portfolio. And will the mix keep on increasing? And if yes, then how should we look at the credit cost because — or should we look at it that since these are the same customers for which we have gold loan, ultimately, this money will be coming back.
So there is even unsecured in nature, but that might not be the risk. And I’ll just ask the second question also, sir. On the branch piece, do we have any approvals right now or are we expecting any approvals for branch expansion? And these — other is then on Mututh Mani, why aren’t we expanding the branches much faster over there or are we restricted on branch expansion there also?
Unidentified Speaker
Okay. So on the first question is on the ECL, hello, on the impairment, total impairment for the whole year is about INR1766 crores. Out of that INR130 crores will be about write-off. The remaining INR630 odd crores will be because of the incremental provisions recurred because of the growth in the loan book going across Stage 1 and Stage 2, both on the gold loan primarily on the gold to —
Harshit
Gold. Okay, you are seeing all the increase in provision is with respect to the gold loan itself. And
Unidentified Speaker
Yeah. And because we have not increased the non-gold in a significant manner, probably we would have increased by about INR2,000 crores in the last one year. So primarily the impairment provisions has increased because of the increase in the gold loan, because we have increased the total loans by about INR30,000 crores plus. So on that itself, you know the ECL provisions would have gone up.
Harshit
Sir, my question was that because over there, whatever Stage 3 has happened in the non-gold loan, I remember in the last call you said that we provide 100% as soon as it slips to Stage 3. And if I go by that, then of the INR760 crore INR780 crore of impairment credit cost this year. But my assumption was more that like around INR200 crore INR300 crore has been from the new business. Is that right? Because I think the write-offs of INR130 crores are from new business you are seeing. But beyond that, another INR100 crore INR150 crore would be provisions on the new business.
Unidentified Speaker
So I don’t know what you intend by the new business because like in the last call,
Harshit
Not full loan business, sorry.
Unidentified Speaker
Yeah. Yeah. So in the last call, we had mentioned about another person loan business where we have done through our branches, there is a, you know, a rise in the NPA problem because of some weakness in terms of collections, etc. So because of that, there is an increase in that. So that would have certainly factored in the increase in the ECL provisions.
That is one thing. And second thing is the write-off, that is INR130 crores. You ask me what was the a gold loan NPA last year, last year was about INR2,400 crores out of — out of INR2,484 crores. This year, out-of-the total INR3,700 crores. The gold loan book is INR3,350 odd crores and the balance, INR350 odd crores is because of the known gold business.
So there is an increase of around about INR200 crores to INR250 crores — INR250 crores in non-gold business, which we would have certainly not we would have included in the impairment, which I had explained in the last call — quarterly call that there is a specific increase in the NPA in the branch-based person loan business. So that is more of a one-off kind of a impact where we have steep — we are stabilizing the collection mechanism, et-cetera.
George Alexander Muthoot
Your second question about the branches, we already have approval for 115 branches, which we are going to open this year. So branch opening will do either in Mani or in Finance, which is happening in the normal-course, it’s not that we are starved of branch — the branches are growing and the business also is growing. So branch opening is not an issue for us.
Harshit
Got it. Sir, just one clarification. This 115 is for standalone. And we have got — okay, this is consolidated. We have a option to open 115 more branches.
George Alexander Muthoot
Yeah, yeah. We will attack — we will go at that later. Once we open this branch, we will think of the Mani branches.
Harshit
Okay. Okay, sir. Thank you.
Operator
Thank you. The next question is from the line of Shreya Shiwani from CLSA. Please go-ahead.
Shreya Shivani
Yeah. Thank you for the opportunity. My first question is again on the asset quality. Just wanted to understand that this — the — for the quarter, if I take the INR74 crore of write-off and if I just balance with the provisions and the gross you’ve given, there is a neg — I mean, there seems to be some upgrades and recoveries that have happened in the quarter.
Can you help us understand about that? And also what is the auction number for the quarter, for the year and for the previous — for 4th-quarter ’24 and for FY ’24 as well, if you can share that number.
Unidentified Speaker
So in December end, the Stage 3 — Stage 3 portfolio on gold loan was INR3,700 plus crores. This has come down to INR3,347
Unidentified Speaker
Crores. December sorry, okay. December total NPA was INR4,17. March it has come down to INR3,700 crores. So to the extent of around INR400 crores has happened, mainly it is in the gold loan book. In terms of auctions, we had auctioned about INR400 crores during last year, INR461 crores last year. Last year.
George Alexander Muthoot
Last full-year it INR62 crores.
Unidentified Speaker
Yeah.
Shreya Shivani
This was INR461 crores is in FY ’25, what was in FY ’24?. It’s fine. Yeah. So just wanted to check one thing from the annual reports of
George Alexander Muthoot
INR960 odd crores, right? Yeah. Go-ahead.
Shreya Shivani
Sir, just wanted to check, sometimes the auction number that you mentioned on the con-calls and when we check with the annual report, it tends to not match. So does it not include the interest outstanding or is this — what is the difference in the number that you gave in the con-call? Interest outst.
Unidentified Speaker
Yeah the number which I — we always talk about in the con-call is the principal amount, principal amount of loans. In RBI reporting in the annual report, it is talking about the realized price and the total use.
Shreya Shivani
Sorry, could you report in annual report, what do you talk about?
Unidentified Speaker
The total dues and the auction realization?
Shreya Shivani
Yeah, yeah. Got it. Okay. Okay, sir. This is useful. Thank you so much.
Operator
Thank you. The next question is from the line of from Elara Capital. Please go-ahead.
Shweta
Thank you, sir, for the opportunity and congratulations on a good quarter. Sir, my question pertains to the draft norms only and two sets of questions there. One is, if the draft norms were to go in similar state through, then will we see change in business mix or shift more towards non-gold lending? Is the business mix changing or even outside these draft norms implementation, do we have any strategy plans or thought process for business mix tilting now towards non-gold? That’s question number-one.
Question number two, so while you explain that these draft norms more from the regulatory and competition and overall landscape perspective, I want to understand more from Finance business model perspective. So just to deep-dive slightly more into especially the LTV norms wherein, so we were also just talking about principal plus interest.
So now the new LTV calculation will be own principal plus interest, plus there are requirements of internal limits on gold loan portfolios to manage risk, which might potentially constraint your gold loan volumes, plus there is now have to be a clear bifurcation on consumption versus income generation loans and there will be stricter sort of monitoring across periods.
So if we put together these kind of restrictions and the implementation or the draft norm implementation were to happen in current state of affairs, then do we see any internal impact on disbursements and this is outside of what is happening on the gold price action. And therefore, so do you see any changes in your practices or a need for customer awareness? Yeah, those are my two questions. Thank you.
George Alexander Muthoot
Very, very lengthy questions. We gave most of the answers in the questions also. So the draft guidelines is still the draft guideline. We have to wait for the final guidelines. That is number-one. The guideline mainly talks about the processes, which have to be harmonies, that is the number two. The only thing which is — which we as an association of gold loan companies are — would like to bring to the attention of the regulator is that the the LTV which is being tweaked is not — would not be in the interest of the customer because if the NBFCs are placed at a disadvantage, most of the customers may go back to the money lenders. So in the last 20, 30 years with lot of effort, NBFCs have been able to bring the customers from the unorganized sector into the organized sector through the NBFCs. And as a result of that, the sector has become corporate and because of that, banks are also finding it easy and good portfolio. So with lot of efforts, these people have come from the Norway sector.
But if the NBFCs are limited through tweaks in the LTV as suggested in the graph guidelines, it will take-back these customers to which I don’t think would be in the interest of the country, interest of the regulator. So we have definitely flagged this to the regulator and our association of gold loan companies have given the presentation on this aspect to them.
All the other aspects are quite good — quite good as strengthening the sector, especially in respect of new players coming into this sector, a process, et-cetera, harmonization and process what should we say clarity for the new sectors or do interest good. So this year taken-up with the regulator and let us hear from the regulator what is their views, our views, not to disturb the sector and probably take-back the customers to the unorganized sector.
We have our representation, so we’ll wait for the final guidelines.
Shweta
The second question was change in business mix or maybe more tilt towards non-gold?
George Alexander Muthoot
No, we have no — we have not thought about that as yet. We are not we have a plan. Our core business is gold loan. We will continue to do gold loan.
Shweta
Sure. Fair point, sir. Very helpful. Thank you so much.
Operator
Thank you. The next question is from the line of Rajiv Mehta from Securities. Please go-ahead.
Rajiv Mehta
Yeah, hi, sir. Good evening. Just two things. Sir, when I look at the your quarterly run-rate of your new customer acquisition and even existing customer reactivation. In the last two quarters, the run-rate has seems to have fallen versus what it was in the first two quarters of the year. There can be some seasonality, but are we seeing that — because as you pointed out that there is increasing competition because the increase in gold prices and many players are entering the industry.
Are we seeing some pressure in terms of customer acquisition, old customer reactivation and which is why we need to step-up on the spend, business promotion expenditure and even employee variables in that case. So is it — is it a slightly becoming a trade-off between keeping growth high and giving away some cost?
Unidentified Speaker
I think new customer additions have in the last four quarters was around 4.5, 4.3, 4.17, 4.17. There’s not much — not many material request we are increasing by about 4 lakh.
Rajiv Mehta
Yeah. New customers. New customers are increasing. Yeah, they are increasing, but the rate at which they were increasing in the first two quarters that seems to slightly come down.
Unidentified Speaker
That is only marginal. This is see when somebody comes and takes a loan, sometimes our customer might be borrowing for INR10,000 and sometimes we might be coming and taking for INR2 lakh also.
George Alexander Muthoot
Anyway, there is a good growth in the new customer acquisition quarter-on-quarter. But of course, as you say, the first-quarter, second-quarter, 3rd-quarter almost INR4 crores every quarter, we should have done INR4 plus extra. At least you are able to do that at — with a higher base or so we are quite happy with that no.
Rajiv Mehta
And the second part of my question was whether to keep up with this current run-rate of new customer acquisition, do you feel the need to step-up the opex in terms of A&P spend business promotional expenditure and maybe even employee variables? Do you see that scenario or you would want to reserve your comment because you would want to also see whether what kind of draft guidelines come into play.
George Alexander Muthoot
No, not because of guidelines. So we definitely would like to always like to increase our customer-base. We have a regular marketing activities, we have regular campaigns, etc., going and that is bringing us business because you should understand that gold loan is a very, very short period load and we have to be very, very quick to get newer and newer customers. Otherwise as an active customer-base will not increase.
So that’s correct. Customers take-back their core, we get new customers also. So we have, we have campaigns, etc., which constantly we run. There is nothing cutting back on that or maybe nothing to do extraordinary also now.
Rajiv Mehta
Okay. And can you share 2 for Belsa and what is the bucket collection efficiency trend be sir?
Unidentified Speaker
I can come back later.
Rajiv Mehta
Sure, perfect. Thank you and best of luck. Thank you.
Operator
Thank you. The next question is from the line of Nidhesh Jain from Investec. Please go-ahead.
Nidhesh Jain
Thanks for the opportunity, sir. Sir, on the yields, how should we think about next year given that competitive intensity is increasing at the same time, interest rates are also likely to decline. So how do you see yields panning out next year and interest spreads panning out next year? And also if you can share what is the incremental yield for Q4 FY ’25. On the gold loan business.
George Alexander Muthoot
Yeah, yeah. Yeah. Our interest spread has always been in the range of 9% to 10% and we would continue to maintain that. If the cost of borrowing comes down, our — after a while, after a quarter or so, we will reduce our yields. If the cost of borrowing is going up, we will increase our rate. But we will try to maintain our spread at between 9% and 10%. That is what we always do.
We have been always doing that and we continue to do that. So if the cost comes down, we will transfer that — we will pass-on the benefit to customers. If the cost of borrowing goes up, as we’ll have — for some time, we’ll try to absorb it. After that, we’ll have to increase our rates. So I think that the interest spread would be the — would be constant
Nidhesh Jain
Sir also, sir. And sir, the yields are broadly similar for Q4 also, the Q4 the incremental yields that those that we are
Unidentified Speaker
Around 18.5%. 18.5%,
George Alexander Muthoot
18.5% is what has been for all the quarters.
Nidhesh Jain
Okay. And the second datakeeping question is on Belstar, if you can share Par zero plus as of March ’25 for Belstar.
Unidentified Speaker
Yeah, I’ll come back on the Belstar numbers.
Nidhesh Jain
Sure, sure. That’s it from my side. Thank you.
Operator
Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go-ahead.
Kunal Shah
Yeah. Hi. So finally, again, getting on to the draft regulations, based on your assessment, if you have to look at it maybe on the LTV side, have we done any analysis in terms of where actually we would have been bridging this norms of interest accrual plus the principal at 75-odd percent, given that drop guidelines are there? No doubt it is still dropped but any internal assessment being done.
And given your experience, is it like customers take a particular value of money, whatever they need and they would be more willing to come and pledge the gold further rather than lowering the quantum of money required. Would that be the case based on your experience over so many years?
And second question, again on the operational part of it, maybe in terms of the customer assessment, which I don’t think we have done till-date, maybe in terms of analyzing the repayment capability of the customers and even the documents with respect to the end-use of the gold loans. So would operationally, how would these things pan-out? Would it be more like the documentation, mere documentation and the self-declaration that would be required or we would have a separate procedure to assess the customers as well. Yeah.
George Alexander Muthoot
Only two questions.
Kunal Shah
Yeah.
George Alexander Muthoot
Okay. Okay. So the first question is about the RAF guidelines and whether we have done a calculation on the impact associated. I don’t think it’s — there is something great in that. And I would also like to say that as of date, you also asked whether borrowers are — as of date, our loan-to-value when the current price is only 62%. Yeah, it’s only 62% is less than 62%. So today also all the borrowers have not borrowed the whole 75%. They have all borrowed only 62%. So there is —
Kunal Shah
So that’s what the question was, maybe average is 62%, but if we look at it maybe any particular proportion of customers who would be more than 70 odd percent.
Unidentified Speaker
Impact assessment is simple. Somebody who was getting INR75 earlier, no, under the new guidelines, you’ll be able to get only INR55 rupees.
Kunal Shah
Yeah. Got it.
Unidentified Speaker
That’s fair. No. And there will not be any standardization in the industry. Somebody who is now lending at 20%, his know it will be at 55, somebody who is lending at 10, it will be 65. So they’ll not know. Finally, the consumers are going to get. He’ll not be clear where he will get an appropriate value for his ornament.
George Alexander Muthoot
That’s what we have put up to the regulators. We have raised these. So just wait for that.
Kunal Shah
Yeah, perfect. So looking at our yield, we believe like it should settle somewhere around 55% to 60-odd percent is what eventually it would settle at. Maybe if we have to land at the — on an incremental.
Unidentified Speaker
Let the final guidelines come and then we’ll take action. No, anyway, you know what is the impact, right?
Kunal Shah
Yeah. Got it.
Unidentified Speaker
Let’s wait-and-see in which direction it goes.
George Alexander Muthoot
What is the second question?
Kunal Shah
No, on the operational part, because now customer segment will also be required apart from collateral.
George Alexander Muthoot
I understood. So yes, it day-by day, the compliance and the operational costs are going up, not only for us, for all NBFCs, not only gold load NBFCs, NBC. So operational expenses, operational cost, compliance cost will go up. So we will have to comply with that or compliance cost will go up, that’s all. What else can we do?
Kunal Shah
No, my question was, would it be like the self-declaration from the customer that suppose if we have to require the customer assessment, we’ll just take that this is the income which they are having or this is the end-use or we will be deploying people to keep the evidence of it, yeah.
George Alexander Muthoot
Sir, let the regulations come, whatever it is, we’ll have to comply it. With comply, only the compliance cost will go up, that’s all. We’ll have to comply it. So at that time, we will cross the bridge at that time. Whatever it is, it will be compliant. We’ll wait for the final regulations. But the point is, all this will add to compliance cost. Cost as well as customer customer. Yeah, definitely.
Kunal Shah
Yeah. Got it. Got it. Yeah. Thanks and all the best, yeah.
Unidentified Speaker
So there was a question on Stage 2 in Belstar.
George Alexander Muthoot
Somebody had previously asked.
Unidentified Speaker
No, Belstar, the Stage 2 percentage is 3.17 and NPA is Stage 3 is 4.98 percentage.
Operator
Thank you. The next question is from the line of Shubran Sumeshara from PhillipCapital. Please go-ahead.
Shubhranshu Mishra
Hi, thanks for this opportunity. The first one is on Mup Mali. In terms of the branch expansion, we have just stopped short of INR1,000 beyond which we might require regulatory require — so I just want to understand what kind of gold loans we are doing, what is the total gold loan capacity in each of the branches that we have built-out? What’s the AUM per branch here? What kind of teams have we built-in at Mani? And if the regulator might look at this as saying that, look, you don’t get regulatory approval, hence you have increased branches here. Can there be some kind of a regulatory oversight or action on Mothod money increasing branches rapidly.
The second question is a datakeeping question. What is the accrued interest and what will be the AUM split less than INR1 lakh, 1 to 3 lakh and more than 3 lakh time.
George Alexander Muthoot
So money and gold loan AUM is INR3,500 crores. I think we explained all-in the earlier also why we started the higher purchase and we started the gold loan. It is around 980 or 990 branches and the AUM is INR3,700 crores. So — and because these are young branches, the business should be going up per branch business should be going up year-on-year.
So we don’t see any regulatory concerns in this. So that is the first part of it. The second part is your interest accrued is INR1,740 crores
Unidentified Speaker
Ticket size breakup, above INR3 lakhs is 38 percentage, INR1 lakh to 3 lakh is 35% and 50,000 to-1 lakh is 15 and the remaining the balance below 50,000 is 13 percentage.
Shubhranshu Mishra
Sure. What is the AUM per brand at Muthor now? I think we come right. What’s the maximum level it can go to?
Unidentified Speaker
You know what is the average in finance, right?
Shubhranshu Mishra
So it can go up to that level. Why shouldn’t it?
Unidentified Speaker
It can go higher also.
George Alexander Muthoot
Should I average more
Unidentified Speaker
The difference between the branches and there is no difference between branches or only the management is different. I mean, the operational team is different.
Shubhranshu Mishra
Understood. Understood. This is very helpful. Thank you so much, sir. Yeah. Management is.
Operator
Yeah. Thank you. The next question is from the line of Mona Khetan from Dolat Capital. Please go-ahead.
Mona Khetan
I was in the queue. Yeah. Hi, sir, good evening. Firstly, on the little
George Alexander Muthoot
Louder place, little louder place.
Mona Khetan
Yeah, is it better?
George Alexander Muthoot
Yeah,
Mona Khetan
Yeah firstly, on the other income it’s a lot higher this quarter. So any particular thing that’s driving it
Unidentified Speaker
Yeah, so if the ARC is there, then I know the investments now mutual funds etc then that’s all.
Mona Khetan
So is that transaction complete? I mean, are the entire recoveries from the ARC sales now reflected in the P&L in our case?
Unidentified Speaker
No. We standing.
Mona Khetan
Okay. And coming to Mani, what is the gold AUM of this INR3,700 crores or and what was the same last year if you could highlight?
George Alexander Muthoot
Last year it was INR1,000 crores. Today it is INR3,700 crores.
Mona Khetan
So the entire AUM consists of cold loan-only.
George Alexander Muthoot
No, no, there is. There was AUM in hy hypothesis, which is about INR500 crores at his speak. It is running down and probably today it’s about 150 crores.
Mona Khetan
Okay. So INR500 crore last year and INR150 crore as on today — as on March-end, is the non-gold portfolio in the Mutual money book?
George Alexander Muthoot
Yeah,
Mona Khetan
Got it. Thanks so much. That’s all from my side. Thank you.
Operator
Thank you. The next question is from the line of Varun from Kotak Securities. Please go-ahead.
Varun
Hi. Hi, sir. I just had two questions. First one was with regard to our different products at different LTVs. So what is the yield difference that we offer to the borrower for the different LTVs like the 75% versus 65% and 50%? And the other question was with regard to Belsa’s collections in Tamil Nadu. We have a large portfolio over there. Are we seeing any impact of the new bill or act that has been passed in the Tamilado Assembly.
Unidentified Participant
So yield difference, we have schemes right from 10% to 22 percentage. So there is no hard and fast road. It operates in different geographies, in different schemes, etc. There’s no particular principle being followed. It is mainly dependent on the schemes which have been decided to run. The second thing is on the impact on Belstar. I think that ordinance will with the.
George Alexander Muthoot
Now we Nadu.
Unidentified Speaker
No, there will be some — no impact in the initial stages then it becomes applicable to everybody in the sector. So we’ll have to wait-and-see.
Varun
These are not applicable to NBFCs.
George Alexander Muthoot
Technically, this is not act is not applicable to NBFC and MFIs. So it is actually accepted technically, but then it is only the perception. People on-the-ground may feel this is applicable for everybody and people may delay payments. But after some time, it has to come. As per the rule, as per the act, both in Tamiladu and in Karnataka, the NBFCs, regulated NBFCs, MFI are accepted. But ground level is always a problem.
Varun
Yes. I was just asking about the collections trend in April or in there any sir.
George Alexander Muthoot
That’s what initially there will be some hiccups after some time, it has to straighten up. Today that,
Operator
Thank you. The next question is from the line of Harshit from Premj Invest. Please go-ahead.
Harshit
Hi, sir. Thank you for the follow-up. This is just on cost of funds. If we look at sequentially our cost of funds increased but I’m assuming that the rate cut narrative has started building up. So just wanted to get some sense on the trajectory of cost of funds and the quantum broad guidance, if you can.
Unidentified Speaker
I think there is a significant reduction post March, we are seeing a significant drop-in the borrowing cost. So I think now we should see — get the benefit of that fall in interest costs unless there is a reversal of the trend.
Harshit
Okay. Got it, got it, got it. And so some bit of spread improvement we should probably see from next quarter onwards as it.
Unidentified Participant
Yeah, again, no, the same thing I used to mention when there is an increase 50 basis-points increase and all doesn’t make much of a difference in our return asset. The same thing. When there is a decrease in cost of borrowings, it’s not going to make a significant change in our return on assets. 5%, 5.5% return asset, this is not going to make a material impact.
Harshit
Sure. Understood. Okay, sir. And if I can just clarify one more time, but it’s not clear on this part that our restriction of 115 approval is in both Mani and Mututh Finance.
Unidentified Speaker
No, that 115 is for Finance.
George Alexander Muthoot
115 permission branches for Finance.
Unidentified Speaker
Mani, we just completed 1,000 branches, allow it to grow because it has a long way to go with 1,000 quantities, you know. And probably at a later-stage, we can always seek approvals from RBA.
Harshit
Fair point, fair point. Understood, sir. Thank you.
Operator
Thank you. The next question is from the line of Bhavesh Kawani from Swan Investments. Please go-ahead.
Bhavesh Kanani
Thank you for the opportunity. First one was on the standalone P&L where we have seen provisions going up materially and in a scenario where gold prices are favorable, one, just want to understand the reasoning behind that? And if you can provide some sense that whether the provisions that we hold today and that will be sufficient to kind of handle a possible correction in gold price and — or continue to provide significantly in ’26 as well.
So the second one sir was on Belstar. If it is possible to share some far zero data for last couple of months, that would be helpful.
Unidentified Speaker
So on first question on, see, is based on 109, so there we consider the historical losses, etc. And based on that, we make provisions. Now we believe that there will be an adequate provision, but I know whether there could be a very large, that is not the way in which we are looking at gold prices. So. So from that perspective, I think we feel that now the provisions are adequate. What was the second question?
George Alexander Muthoot
Yeah. Monthly collection, monthly or we don’t — monthly. As on-date we have
Unidentified Speaker
I mentioned earlier, Stage 2 percentage on is as on March 31st is 3.17%. Stage-3 is 4.98%.
Bhavesh Kanani
Any numbers you can share for zero level share?
Unidentified Speaker
No, I don’t — I don’t have the numbers right now.
Bhavesh Kanani
Okay. So going back to your response on provisions, you know, for ’24, the provisions translated to something like 30 basis-points, whereas for ’25 full-year, it translates to around 80 basis-points. So — and you mentioned that we are following the ECL method. So what are those key changes in the ECL assumptions, which led to this kind of increase?
Unidentified Speaker
So I think I gave — earlier I gave the breakup of ECL provision. Out of INR766 crores of ECL provision, INR130 crores is because of the write-off and the remaining is because of the increase in ECL provisions as well as no increase in NPAs of the non-gold book. So increase in provisions because of the non-cool book is about INR200 crores. The remaining is because of the increase in the loan book.
Bhavesh Kanani
Wonderful, sir. That helps.
Operator
Thank you. The next question is from the line of Nikhil S. John from GYR Capital Advisors. Please go-ahead.
Nikhil S. John
Is that audible, sir?
George Alexander Muthoot
Yeah.
Nikhil S. John
Hello. Yeah. Thank you. Thank you for the opportunity and sir, congratulations on crossing INR1 lakh crore milestone. So my first question will be with you gold loan AUM up by 41% year-on-ye here and interest income rising 56%, do you see any structural margin expansion in the FY ’23, especially with operating leverage kicking-in 850 new branches now built-in.
George Alexander Muthoot
That’s your question. So I think we have been — we have said that our interest Spread is about 9.5% in last all quarters, it has been 9.5%. If our cost, et-cetera, borrowing cost comes down, we will reduce our yield, but of course, maintaining the interest spread. Operating cost, yes, it cannot — it has come down because of the per branch business going up. But as you know, inflation is also there. So everything will go up, the rent will go up, salaries will go up to on one-side, that will go up, but then that is compensated by more per bar business. So I think operating cost, et-cetera would also remain almost the same.
Nikhil S. John
Okay. And I have one more question. And is there any internal benchmark that we have set to improve this metric further before adding more branches
George Alexander Muthoot
Benchmark? I didn’t understand the questions, please.
Nikhil S. John
Any internal benchmarks or KPIs that you have implemented in every branch to be followed?
George Alexander Muthoot
Markus that we ask them to do the more — do more per branch business. I think that is the benchmark we give to the branches. Okay. Individual branch business should go up. That’s the benchmark.
Nikhil S. John
Okay. Thank you. Thank you, sir. Thank you. Okay. Yeah.
Operator
Thank you. The next question is from the line of Gino Thomas from IND Invest. Please go-ahead.
Jino Thomas
Hey, good evening, sir. Congratulations for a great performance. Sir, I just — I think I’m audible.
Unidentified Speaker
Yes.
Jino Thomas
So I’m very happy to see slide number 20 to 25. Probably I myself have spoken about this for probably a couple of quarters back. And request you to give some color on this analytics initiatives centralized and many, many innovations coming there in the company, maybe on for cross-sell cost-efficiency, et-cetera, it would be the objective. It would be great help if you can give some color on that.
George Alexander Muthoot
So I think it is already colored red. That is one. On the other — on the side, of course, these are all steps we are taking to improve the performance of the branch, to improve the customers — more customers coming to the branch. These are just steps we are already taken, some of them are in-process, some of them we have already implemented.
I’m sure going-forward, these things — these steps should certainly give more customer footfalls in the branch and definitely improve the business. So everything almost what we said is self-explanatory that we have done. I don’t want to go into each detail because I don’t have the niche detail, et-cetera, but understand that these are things which we have been implementing for the last one or two years. It’s just that we just put it on paper now. So these are all meant to get more customers to the branch.
Jino Thomas
Okay. Thank you so much, sir. Wish you all the very best for FY ’26 and hence.
Operator
Thank you. Ladies and gentlemen, in interest of time, this would be our last question. I would now like to hand the conference over to the management for closing comments.
George Alexander Muthoot
Thank you. We had a good interaction with all the team members, all the investors and our supporters. Sorry that there was some connection of the disruption in the connection. I think it was mainly because there is some problem in the airtel — total network in Tamil Nadu and Kerala, but I think we took a second alternative and it has gone well.
We are happy that we were able to report good numbers and we are again happy that we are able to support our customers or and also our investors. We will continue to do that going-forward, continue to work-in the best interest of all our stakeholders, including our borrowers, lenders, our investors and be confident that Mutur will stand-by all its values and principles and see that we grow from strength-to-strength so that all our stakeholders are benefited. Thank you. Goodbye from Mutur Group here. Thank you.
Operator
Thank you. On behalf of Finance Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you. Good day