Muthoot Finance Limited (MUTHOOTFIN) Q4 FY23 Earnings Concall Transcript

Muthoot Finance Limited (NSE:MUTHOOTFIN) Q4 FY23 Earnings Concall dated May. 19, 2023.

Corporate Participants:

George Alexander Muthoot — Managing Director

Oommen K. Mammen — Chief Financial Officer

Unidentified Speaker —

Analysts:

Sanket Chheda — DAM Capital Advisors Limited — Analyst

Abhijit Tibrewal — Motilal Oswal — Analyst

Rahul Shah — Shah Associates — Analyst

Nidhesh Jain — Investec — Analyst

Nikhil Nyati — Equirus Securities — Analyst

Nischint Chawathe — Kotak Institutional Equities — Analyst

Rajiv Mehta — YES Securities — Analyst

Shweta Daptardar — Elara Capital — Analyst

Bunty Chawla — IDBI — Analyst

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Shubhranshu Mishra — PhillipCapital — Analyst

Pavan Kumar — RatnaTraya Capital — Analyst

Manan Tijoriwala — ICICI Prudential AMC — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Muthoot Finance Q4 and FY ’23 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]

I now hand the conference over to Mr. Sanket Chheda from DAM Capital Advisors Limited. Thank you, and over to you, sir.

Sanket Chheda — DAM Capital Advisors Limited — Analyst

Yeah, hi, and very good evening to all of you. We are here with us — to discuss the Muthoot Q4 results. We have the entire management team with us. Starting with George Alexander Muthoot, who is the Managing Director, then Alexander George, George M. Alexander, George M. George, George M. Jacob, who are Whole-Time Directors, then Eapen Alexander and K.R. Bijimon, who are Executive Director, and Oommen Mammen, who is CFO of the Company.

Without further ado, I will hand it — hand the call over to Mr. George Alexander Muthoot for their opening remarks, which will be followed by question-and-answers. Over to you, sir.

George Alexander Muthoot — Managing Director

Thank you. Good evening. This is George Alexander Muthoot, Managing Director, the Executive Directors of Muthoot Finance are also percent here, along with the CFO and also the COO, Mr. K.R. Bijimon. This quarter, business has been good. We have the highest-ever quarterly gold loan disbursement of INR51,850 crores, that’s the higher-ever gold loan disbursement. And we have an all-time high gold loan growth in any Q4 of INR5,051 crores, that is the higher we have in any quarter four. And we have an all-time high interest collection of any quarter of total INR2,677 crores, That’s also a very good performance. We have increased — increase in the consolidated profit after tax, 8% Q-o-Q at INR1,009 crores. Along with the subsidiaries, our total branches as on 31st March 2023 is 5,838 with an addition of 259 new branches opened during this year. Muthoot Finance is also certified as a Great Place to Work for the second year in a row by Great Place to Work Institute. Muthoot Finance has also been certified as India’s Most Trusted Financial Services Brand eighth year — seventh year in a row by TRA’s Brand Trust Report 2023. In addition to Mr. Amitabh Bachchan, Muthoot Finance has also engaged Mrs. Madhuri Dixit as our Brand Ambassador in February 2023.

The consolidated AUM stands at INR71,497 crores, which is up by 10% quarter-on-quarter. The standalone AUM of gold loan stands at INR63,210 crores, which is also up 9% quarter-on-quarter. The standalone profit after tax stood at INR903 crores from the quarter — for this quarter. We have also launched a few new products, one is the Small Business Loans, which we have started, it’s hit the backbone of the Indian economy, accounting for 90% of all the business in the country. We have launched Small Business Loans to address the prevailing gap of credit access to MSME segment with an unsecured loan ticket size of up to INR10 lakh. We have just started it. We have commenced operations in metros and we have tried to expand it to Tier 2 and Tier 3 locations in phase two. We are doing it on an initial basis and we will see the progress how it is turning out and then go forward.

We have also started micro personal loan — small personal loan, as part of our initiatives to leverage the existing customer base and to position ourselves as the one-stop financial service provider. We are now offering a pre-approved personal loan, we call it, micro personal loan, to eligible customers. It is an EMI loan for nine months to 12 months. The maximum loan [Technical Issues] INR1 lakh and the entire loan journey is digital. The loan of — the launch of this product has expanded our product range, increased our customers engagement program — progress, and now cater to their diverse financial needs. This is one thing which is missing in Muthoot Finance that we have started with personal loan — micro personal loan, which is an EMI loan.

The subsidiaries have also — now on — the growth has been [indecipherable] in the subsidiaries, the forfeit, disbursement have started growing up — going up in this quarter and there is a significant jump of 153% in this quarter — during this quarter of INR84 crores compared to INR33 crores in the last — previous quarter. We plan to grow the disbursement 400% compared to financial trajectory of Muthoot Co-Finance was not growing much, but then 400%, though, looks fine, but definitely it is good absolute numbers, it will not be that high, but we plan to grow 400%.

We also plan to expand the home finance network by opening 26 new branches across states in this year. The vehicle loan disbursement by Muthoot Money has also started well and against — in 2000 — this year, just last month, we have disbursed INR20 crores. Belstar Microfinance has crossed INR6,192 crores as loan AUM as of March and the net worth crossed INR1,000 crores, which is a historic landmark and the revenue has also crossed INR1,000 crores, a year-on year growth from 42%. Collection efficiency continues to remain at 99% for Regal look then comes. The profit after tax of the company reported INR130 crores, which is again a year-on year growth of INR189 crores.

The corporate social responsibility, Muthoot Finance has fulfilled its corporate social responsibility commitment with a spend of 101% during the financial year. We have spent a total of INR96 crores, which is INR69 lakhs in excess of our statutory budget. The Company has allocated more than INR100 crores for the next financial year with an emphasis on areas of environment, health, and dedication to alleviate the poverty and uplift the financial [indecipherable] sections of the society.

We have declared an interim dividend for the financial year ’23 of of 220%, that is INR22 per equity share of INR10, involving a payout of INR883 crores. We have raised INR250 crores through the 30th public issue of secured, redeemable, NCD. And we have also launched a new marketing campaign, Kholiye Khushiyon Ki Tijori. So this is the gist of the financial results of this year. I think now I would stop here and over the phone to questions and comments from the investors. Thank you.

Questions and Answers:

Operator

Thank you very much up. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yes, thank you, and good evening, everyone. Sir, I have two questions. And first of all, now congratulations to you and the team, definitely a very, very strong quarter in terms of gold loan growth. So, sir, I mean, my questions predominantly revolve around that. Just want to understand from last quarter to this quarter what has really changed that has helped us deliver such strong growth in new gold loans. Is it predominantly, I mean, higher prices — higher gold prices or is it also to do with some lowering of aggression that you are seeing from maybe banks? That is the first question, basically what is it that has helped you kind of deliver such strong gold loan growth during the quarter. And secondly, sir, if you could just explain why is there such a sharp jump in your employee expenses during the quarter versus last quarter or for matter the last quarter of the prior year.

George Alexander Muthoot — Managing Director

Okay, thank you. Gold loan growth for this quarter has been robust. A few things helped. We have actually started a great campaign for all our branches and staff to do more gold loan business, and I think that has paid dividends. Our brand ambassadors and our gold loan initiatives also see results, and that is what I also said last time. Secondly, the economic activity has also — has started picking up and the demand for loans and gold loans have increased in this quarter. As you definitely said, that higher gold price has also helped, but not to the extent of the growth, but definitely it has helped. And again, as I was saying last time also, I feel that gradually the competition for the excitement of the banks, etc., in gold loan is slowly waning because as [indecipherable] the excitement of the banks, etc., to gold loan also waning[phonetic] and that is also a fact. So that is one part of it. The gold price [indecipherable]. But most important, we have been — the economic activities have picked up and we see gold demand and our prices have also started bringing in more and more. The increase in the number of employees, we have increased more than 1,000 employees during this quarter, that must be one of the reasons for that. And overall, this — there’ll always hike in the salary also — increment salary also comes in every quarter — every year, probably this will step-up this year. We have not looked so much into this. There’s no big aberration we see with that.

Abhijit Tibrewal — Motilal Oswal — Analyst

Perfect. Sir, just one last follow-up question here. Just wanted to [Technical Issues] that given that we talked about these couple of things, higher gold prices helping economic activity picking up, which is leading to better gold loan demand and the margin excitement of banks in gold loans. Is it kind of giving you higher confidence of a better — or let me put it this way, would you now start guiding for higher gold loan growth versus what you’ve been guiding in the last two quarters? Sir, one more question on the sector. Just wanted to understand, is it a common practice in gold lending that once the contracted tenor gets over, a customer can repay the interest and then that gold loan can be rolled over based on the current market prices of gold prices? Is that a common practice in the gold lending industry? And the other thing is, related question here is, have you had some conversations with the RBI around this practice?

George Alexander Muthoot — Managing Director

Okay. Your question was whether we see better growth in the coming months. Yes, that’s what we see. And we had — for several years, we have been guiding a growth of 15%, and only last year, we were — or just past year, we were unable to do the 15%. We were able to do only about 7%. But I’m sure, this year, we should be doing in excess of 15% this year growth. So that’s what we’ll come back to the earlier 15% plus growth this year, that is the first part of it. The second one, you said people coming after the PD. So on the gold loan side, 90% of the loans get closed before 12 months. It’s only that the 10% which goes beyond the 12 months. [indecipherable] may come for that, and this — because this is so fungible and easy, because there is no entry loan, exit loan. It is easy for the customer to go and so on and take the same loan, etc. So it is better for us to or to collect the interest and then renew the loan up, at that time. But now far and few, very few people who do that. Most of them, before 12 months it is almost closed. Very few customers who go beyond because our period is not — some companies have three months, six months, etc., our loan tenure is 12 months. So after 12 months, 90% — more than 90%, 95% of the customers close their loan at that time.

Abhijit Tibrewal — Motilal Oswal — Analyst

Got it, sir. So this is useful now. Maybe I’ll come back in the question queue if time permits. Thank you so much, and wish you and the team the very best for the next year.

Operator

Thank you. The next question is from the line of Rahul Shah from Shah Associates. Please go ahead.

Rahul Shah — Shah Associates — Analyst

Good evening, everyone, and good evening, Mr. George Alexander Muthoot, I am a big fan of yours. So my first question is, you said in the previous con calls that — and also in the TV interviews that Muthoot Finance is a very operationally-intensive business. So can you tell me what exactly do you mean by that and how exactly the fintech players and the bank, whether they are small bank or big bank, not able to replicate that model of yours — to compete with that model of yours. How operationally-intensive is it?

George Alexander Muthoot — Managing Director

Thank you. Thank you. Yeah, I didn’t said about Muthoot Finance, I had said about gold loan business. Gold loan business of Muthoot Finance is an operationally intensive business because, first, the gold has specifically counter the price, it has to be physically weight checked and also [indecipherable] or should we say, alternative for that. And second, this has to be checked [indecipherable] has to be collected, and then [Technical Issues] more than all the other usual photos, the KYCs, etc. They have to physically pack it, check it, and keep it in the strong room. We have also, what should we say, look at the safety of the strong room and the gold ornament and we have to again when the customer comes back to release it, they have to release it in good time. A loan is given maybe 15 minutes, 10 minutes, 15 minutes, 20 minutes’ time. When it is released, when we give it back, we give it in three, four minutes’ time, which includes also a security system, safety security system which we have in our branches to store and take care of the gold, because we have an earlier very many attempts at break-in all the way the vault, etc., and all this attracts all these elements who try to steal these things, that is one part of it. So we have to take care of that. It’s not always anybody who does that, as we take care of that.

The second thing is, again, the staff. The staff also — we have been very careful with the staff also because this is gold and cash, which is very attractive for maybe even for the staff also to do some sort of malpractice, that also has to be done. So we have a team of more than 1,000 physical inspectors or auditors who visit branches frequently maybe once in a week, once in two weeks, depending on the size of the branch, once in a month to check — randomly check the gold packets there with numbers, with quality. So this is operationally very challenging because we have to return the gold to the customer. Actually, the customer has to have big trust in a gold loan company to hand over the INR100 rupees note and take INR60 or INR70 note from them. [indecipherable]. So the trust is also very important. So all this quite a lot of operations challenges and that over the years we have been able to train our staff also for even the checking of the gold — the assessing of the gold. We don’t employ [indecipherable]. That’s what I meant when I meant by all this operationally challenging. Somebody thinks of this looks easy, but operationally this is integrated. That’s what I meant.

Rahul Shah — Shah Associates — Analyst

Okay, sir. And next question is, is there AUM dependent on gold prices totally or there are some other factors as well and how do you plan to utilize those factors to grow that? And secondly, where do you see your company in the next five to 10 years, both in terms of number of branches and also profitability, specifically for the gold loan segment?

George Alexander Muthoot — Managing Director

So I think I answered part of that in the first question, that is, there are quite a few things. Gold price is also a part of it because somebody can get more money on their existing loan, that is gold price is also one part of it, but that may be only a small part of it. The most important part is, somebody should definitely need the money and they should be available in that place to do their loan, they should need a loan amount and they should have the gold with him and he should have the mental presence to purchase gold and take money, not something else. And so if all these things come together, let the business is there. And your question about growth, I don’t have guidance, that we have been growing 15% in the gold loan business for the year, except for last year, which is a difficult year for us for very many reasons which I have explained earlier, but now I think we are again back on the 15% plus growth path. And I’m sure we should be able to do that not only one year in the — more years to come also. 15% is something which we would call it [indecipherable]. And so the [Technical Issues] shortly, we should be opening about 150, 200 branches in a year, that is something which we looked — we look at the need and necessity for branches in each area and then go on and go do that. And the profitability is, when the business also grows, we should see profit also going up proportionately at least.

Operator

Thank you. Mr. Shah, may we request that you return to the question queue for follow-up questions. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Nidhesh from Investec. Please go ahead.

Nidhesh Jain — Investec — Analyst

Thanks for the opportunity. Firstly, on the yields, what are the incremental yields that we have got in this quarter on the gold loan business and is there an impact of penal interest circular — draft circular that we foresee on the business? And second part of the question is on digital lending that you are starting. Can you talk about how are we approaching the customers who are eligible for these personal loans? How do we plan to scale the collection infrastructure for that? These are the two questions, sir.

Oommen K. Mammen — Chief Financial Officer

So the yield for the quarter is 18.48%, and in Q3, it was 18.22%. I think we have been more or less able to stabilize the teaser loans, which were there in the past. I think going forward, it should remain around these levels. As far as, the penals are just — circular, I think it’s — still it is in draft form. Let’s penal on the final circular. So whatever is — at the end of the day, if you need to raise a particular amount of revenue, we have to raise it, whether as charges or as interest. So we’ll take a call at that point of time.

Operator

Thank you. Mr. Nidhesh, does that answer your question?

Nidhesh Jain — Investec — Analyst

Yes, there is also a follow-up question on digital lending. If you can share how we’re reaching the customers who are eligible for these loans and also share the collection strategy in case of bounce and overdue?

George Alexander Muthoot — Managing Director

So we actually — we don’t do any digital lending. We do — we lend only to the customers who come to our branch. So who are our existing customers, we give them a personal loan based on this call, etc., they have given an EMI loan. And collection strategy for the usual collection things, so nothing different about it.

Unidentified Speaker —

So for faster processing, digital capabilities are useful. [Speech Overlap]

George Alexander Muthoot — Managing Director

Locating customers and probably giving them their disbursal, that’s all.

Nidhesh Jain — Investec — Analyst

Okay, sure. Sure, thank you, sir. Thank you.

Operator

Thank you. The next question is from the line of Nikhil Nyati from Equirus Securities. Please go ahead.

Nikhil Nyati — Equirus Securities — Analyst

Good evening, sir. Am I audible?

George Alexander Muthoot — Managing Director

Yeah, yeah, please. Yes, yes.

Nikhil Nyati — Equirus Securities — Analyst

Congratulations on a good set of numbers. Sir, I have just one question regarding the new players that are coming into the market. They have high opex, but their low base absorb the opex. And I just wanted to know your view how do they gain businesses. Through channel checks, we have understood that they are reducing the interest rates to gain business. Have you come across any instances wherein have you lost the business through these people — to these people? Thank you.

George Alexander Muthoot — Managing Director

I do not know that new NBFCs coming with lower interest rates, etc. Probably banks come up for lower interest rates, etc., but I don’t know if both are newer NBFCs coming and offering the competitive rate of interest. As you said, opex definitely is there. I don’t know how they are accounting for these opex, whether they are accounting it on a pro rata basis also, I am not sure. So definitely there is opex, and then not aware of any new NBFCs, which have come and probably given very low rates of loans, gold loans. I’m not aware of those companies.

Nikhil Nyati — Equirus Securities — Analyst

Okay. And sir, the next question is just a data keeping question. Can you give the AUM breakup with regards to the ticket size between INR1 lakh — INR1 lakh to INR2 lakh and above INR2 lakh? Yeah, just a minute. Yeah, I think the average ticket size is above INR70,000. The average ticket size is INR70,000.

Oommen K. Mammen — Chief Financial Officer

So Nikhil, no — this information — right now, I don’t have this information. We’ll — we can provide you later.

Nidhesh Jain — Investec — Analyst

Okay, okay, that answers my question. Sir, I’ll join the follow-up queue, if I have any further questions. Thank you.

Operator

Thank you. The next question is from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead.

Nischint Chawathe — Kotak Institutional Equities — Analyst

Yeah, thanks for taking my question. Can you mention the quantum of auctions done this quarter?

Oommen K. Mammen — Chief Financial Officer

Auction — see, auction is very low, I think around INR27 crores.

Nischint Chawathe — Kotak Institutional Equities — Analyst

[Speech Overlap] And last quarter, third quarter?

Oommen K. Mammen — Chief Financial Officer

Just give me a second. INR233[Phonetic] crores.

Nischint Chawathe — Kotak Institutional Equities — Analyst

Sure. And there has been a fair amount of pile-up of NPA, so do you expect large blocks of auction in the first or second quarter [Speech Overlap] at some point of time now?

Oommen K. Mammen — Chief Financial Officer

Yeah, yeah. See, these NPAs up because they have crossed the 12 months plus three months period. But then many of these — very many of these customers who are there in this, have paid interest rates, etc., and they have also requested for some more time for us. So we are in the money for all these loans and we don’t expect any interest in these accounts. We have around 7.5 tons of gold as far as these NPAs are concerned.

Nischint Chawathe — Kotak Institutional Equities — Analyst

So there may not be any large block of auctions [Speech Overlap].

Oommen K. Mammen — Chief Financial Officer

No, sir. No, sir.

Nischint Chawathe — Kotak Institutional Equities — Analyst

Sure. And the other thing was on the cost front, would you say that, on a cost basis, how much of it could be sort of one-off and how much of it would be sustainable going forward?

Oommen K. Mammen — Chief Financial Officer

I think this quarter, it is slightly higher because of the — because when you have a higher growth, we may have higher amount of incentives to the employees, that is one thing. And on the Directors’ remuneration also, there is an annual performance incentive, which is booked. So otherwise, I think it should more or less remain somewhere around 3.5 percentage at least for some more time.

Nischint Chawathe — Kotak Institutional Equities — Analyst

Sure. And anything that you envisage — just last question, if anything that you envisage in terms of increase in cost of funds?

Oommen K. Mammen — Chief Financial Officer

So I think the borrowing cost is going up. I think most of the banks [indecipherable] are around 8.5 percentage. So I think the cost of borrowings should move in that direction unless we start seeing reversal. I think last few days or week, we are seeing some sort of softening of the rate. But till that happens in a major way, I think it should move more toward 8.5 percentage in next few quarters.

George Alexander Muthoot — Managing Director

Even if the interest cost goes up 20, 30 bps, we should be able to pass it on to our customers, because then — that is with the cost of funds is increasing for us, is increasing for everybody in the market. So [indecipherable]. So I don’t think we have any — we do not have any difficulty in passing on such incremental borrowing cost to our customers.

Nischint Chawathe — Kotak Institutional Equities — Analyst

Sir, got it. And I think you mentioned that the trajectory of business in the last one-and-a-half months is strong.

George Alexander Muthoot — Managing Director

Okay, thank you.

Nischint Chawathe — Kotak Institutional Equities — Analyst

Yeah, thanks.

Oommen K. Mammen — Chief Financial Officer

Thank you.

Operator

[Operator Instructions] The next question is from the line of Rajiv Mehta from YES Securities. Please go ahead.

Rajiv Mehta — YES Securities — Analyst

Yeah, sir. Thank you for giving me the opportunity. So sir, while you were talking about competitive intensity from banks for the margin slightly waning, so far, we have not seen any reflection of it hitting your customer metrics. So when you look at the number of new customers acquired or even reactivation of old customer or even additional loan on additional collateral to existing customer, that metric has been moving pretty slowly, it’s been very stable. So how do you — how do we see this metrics kind of improving in the future and what can drive more customer acquisition, more customer activation, what choices we will put for that?

George Alexander Muthoot — Managing Director

So we have been putting quite a few marketing initiatives. We are doing a lot of outside market activities also, that is definitely bringing in customers. So the initial [indecipherable] is a very short-term product. Now, its tenure of three to four to five months is very short. So customers go, new customers come, existing customers come back again, so it is not that we get north of new customers to this, the new customer additions are there. Definitely, we have added customers — new customers have been added this year. New costs have been added, that also happens. So I think — it’s an ongoing process we’ll be doing. More and more initiatives to get more business, more customers, new customers also. Also, existing customers can also bringing more of their loan because what we have seen is every customer has more than one loan, probably with us or somebody else. We think more of this old business — more of the existing gold loan business from other institutions also is very good. So the existing customers can be giving us more and more business also.

Rajiv Mehta — YES Securities — Analyst

And sir, do we internally track that more percentage of customers, which went to competition in the last couple of years, because of their heightened activity, are coming back to us?

George Alexander Muthoot — Managing Director

See, these are small loans. We don’t know how to keep a track of somebody who has gone to another bank and have come back [Technical Issues] he has gone to another bank, because he did not takeover, etc., so each — and I don’t know whether he closed in, took the next loan from probably another bank. And the third loan, instead of going to that bank after probably he [indecipherable]. So very difficult to keep that track because it’s not a [indecipherable] property, etc. So if it’s a property, we would have known. This property was [indecipherable] to that bank and now it is come to us. So this is — for example, gold loan. So I don’t think — it’s really the impression we get from our field team in the branch that people, whether they have gone in, etc., is the impression we get from all of this. Every customer, you will see go elsewhere, he comes, closes our loan, and then goes for the next loan[phonetic]. So we do not know where the customer is going.

Rajiv Mehta — YES Securities — Analyst

And sir, just lastly, any change in the product level interest rate in recent months, including [indecipherable]?

George Alexander Muthoot — Managing Director

No, I think we constantly do tweaking of the products region-wise, geography-wise, etc., to cater to different sectors and different regions[phonetic], so that is an ongoing process. There are not really violent changes[phonetic]. There are not really — as you would have seen, we are not thinking of any ultra-low teaser rates, etc., but of course, we always offer a different rate. So maybe a 12% loan is always there, 14% is there, 18% is there, 19% loan is there. All these loans are there. So what we need is from a consolidated or a blended ease is what they are looking at. So what — as Oommen said earlier, we have about [indecipherable] is a blended yield.

Rajiv Mehta — YES Securities — Analyst

Got it, sir. Thank you so much. Best of luck.

Operator

Thank you. [Operator Instructions] The next question is from the line of Shweta Daptardar from Elara Capital. Please go ahead.

Shweta Daptardar — Elara Capital — Analyst

Thank you, sir, for the opportunity. So I have a couple of questions. The first one is, while the teaser loan portfolio is behind and they have been migrated to higher interest rates. So have they been migrated, say, from a 7%, 8-percent-odd to directly 18%, 19% plus?

George Alexander Muthoot — Managing Director

That’s your question? Okay. See, there is no migrations, etc., this is [indecipherable]. When he comes for the new loan, they have to take that new loan at a new rate. New rate can be 12%, 18%, 15%, etc. It’s not that somebody has been migrated from 6% to 18%, no, no. We would have stopped that scheme and customer has to redeem that loan and probably when he comes for the next loan, he’ll have to jump in at this new existing rate.

Shweta Daptardar — Elara Capital — Analyst

Okay. Sir, secondly, as far as growth is concerned. So first, commendable growth on the gold loan traction, on the gold loan side. But just — because you mentioned that, it cannot be completely attributed to gold price, right, of course, you gave other reasons. But historically, if I go back and see that Q4 is always a seasonally strong quarter. Sir, is there a seasonality? And if so, what does that thing, which is driving the seasonality every fourth quarter of the year? And then if the answer is, yes, then how do you see quarter-on-quarter gold loan momentum for next two quarters?

George Alexander Muthoot — Managing Director

Okay, so what we said is, on the fourth quarter, yes, we agree that it’s a good quarter. This year’s fourth quarter has been a historical high. That’s what we said. Historical high of the fourth quarter. So compared to any other fourth quarter, this was the highest. That is the first part of it. Second is that we have given a guidance of about — of 15% plus this full year, so probably we should be able to [Technical Issues] in the coming next year. So every quarter, we should see better — it’s not that every quarter can be the highest quarter. So we see that we get the 15% overall yearly growth.

Shweta Daptardar — Elara Capital — Analyst

Yes, sir, that was great. Sir, one last question I’m squeezing in. Sir, we have also seen stunning improvement this particular quarter. You also mentioned that there are customers who open and close the accounts, there are renewals happening. So is this the reason — so what is the reason for stunning improvement at a time when competitive intensities has been still flaring up?

George Alexander Muthoot — Managing Director

When the overall growth happens, [indecipherable] also has to go up. It is not directly proportional to the growth because the gold price is also a factor. So — but then, you are seeing a gold loan growth in this quarter. So [indecipherable] also has to go up.

Shweta Daptardar — Elara Capital — Analyst

Okay. Okay, I’ll come back — I’ll take this offline. Thank you.

Operator

Thank you. The next question is from the line of Bunty Chawla from IDBI. Please go ahead.

Bunty Chawla — IDBI — Analyst

Congrats, sir, on a good set of numbers and thank you for giving me the opportunity. First, the — sorry, I have joined late if you’ve already shared that number. Branch expansion for this year and RBI approval for number of branches, what was that number?

George Alexander Muthoot — Managing Director

So we had an approval for 150 branches, and this quarter, we opened 67 branches. And I think that 150 is complete, so on an ongoing basis, we will be opening more branches.

Bunty Chawla — IDBI — Analyst

So for this FY ’24 what is the target of branch openings?

George Alexander Muthoot — Managing Director

Maybe 100, 150 branches we should be opening every year.

Bunty Chawla — IDBI — Analyst

Okay, okay, sir. And secondly, sir, what is the increase in average ticket size on a sequential basis, Q-on-Q basis?

George Alexander Muthoot — Managing Director

Average ticket size?

Bunty Chawla — IDBI — Analyst

Yes, sir, yes

George Alexander Muthoot — Managing Director

Now, it is INR70,000.

Bunty Chawla — IDBI — Analyst

So what was the growth on a Q-on-Q basis?

Oommen K. Mammen — Chief Financial Officer

So what is the question?

George Alexander Muthoot — Managing Director

Wanted to know the average ticket size last quarter.

Oommen K. Mammen — Chief Financial Officer

This quarter, it is INR70,000.

George Alexander Muthoot — Managing Director

That’s all you wanted to know?

Bunty Chawla — IDBI — Analyst

Yes, sir. Yes, sir. Yes, sir. Yes.

George Alexander Muthoot — Managing Director

One minute.

Oommen K. Mammen — Chief Financial Officer

So December, it was INR70,000, this March it is INR75,040.

Bunty Chawla — IDBI — Analyst

Okay, it’s INR5,000. Sir, lastly, in previous question on the higher expenses you said, so what should be the normal run rate we should carry for next Q2 quarter or full year ’24, if you can highlight on that?

George Alexander Muthoot — Managing Director

Yeah, yeah, we think — we expect next year to grow by 15%, 1-5.

Bunty Chawla — IDBI — Analyst

And — no, sir, no, sir, on opex part. As, in the previous question, you said a few — for example, you said Directors’ remuneration was higher during this quarter. So for full year FY ’24, what should be the expected opex we should carry, we should consider?

Oommen K. Mammen — Chief Financial Officer

So that’s what we — I am saying in an earlier question, so we are expecting around three-and-a-half percentage.

Bunty Chawla — IDBI — Analyst

Three-and-a-half? Okay. Thank you. Thank you very much, and best of luck.

Operator

Thank you. The next question is from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yeah, thank you for the follow-up. Sir, again, just one thing, which has kind of bothered you a little bit, just wanted to understand this and can you clarify this. I recall, I mean, maybe a quarter or two quarters back, I mean, there were, I mean, articles in media where it was often talk that banks at the margin were giving out personal gold loans in the garb of agriculture gold loans if you quantify for PSL. So I mean, have you seen some change there or are those practices still continue? I don’t — I somehow weekly recall, we’ve been highlighted these practices to the regulator. So have you heard anything from the regulator or have these practices not stopped?

George Alexander Muthoot — Managing Director

We have — as you said, we have highlighted it to the regulator. We hope — expect that they would have taken some action, but anyway, we have not got any confirmations from the regulator regarding this. We have only said as we don’t expect them to get back to us directly on this also. We have raised our concerns with the regulator, that’s it.

Bunty Chawla — IDBI — Analyst

But sir, are these practices still going on or have they stopped?

George Alexander Muthoot — Managing Director

We have also — probably we should say, have lost interest in that.

Bunty Chawla — IDBI — Analyst

Got it. sir. Thank you so much, sir.

Operator

Thank you. The next question is from the line of Vaibhav Badjatya from Honesty and Integrity Investment. Please go ahead.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Yeah. Yeah, thanks for giving the opportunity. Sir, just can you give me the total absolute amount of penal interest that is recognized for the full financial year this basically FY ’23 and FY ’22 absolute amount of penal interest.

Oommen K. Mammen — Chief Financial Officer

Sorry, can you repeat your question?

George Alexander Muthoot — Managing Director

Total penal interest.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Absolute amount of penal interest for FY ’23 an FY ’22.

Oommen K. Mammen — Chief Financial Officer

So, sir, we don’t [Technical Issues] recognize that interest. So everything we recognize as an interest.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Yeah, but, I mean, for the loans that become overdue, you will be charging some additional charge, right? So I just want that additional number, what is that in terms of absolute amount.

Oommen K. Mammen — Chief Financial Officer

So to give — and I don’t have absolute numbers, to give you an indication, so normally, our rates becomes 22% to 24% after 12 months, and there is a 2% additional penal interest, which is charged on those overdue loans.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Okay, so 2% additional? Okay. Okay, that’s it from my side. Thank you.

Oommen K. Mammen — Chief Financial Officer

Yeah, so you need to link it to the fact that most of the loans gets close before 12 months.

George Alexander Muthoot — Managing Director

90% to 95% of the loans get closed before 12 months.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Yeah, yeah, I understand that. So that amount will be only for the overdue or the loan that has given, I understand that. Yeah, that’s it from my side. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Shubhranshu Mishra from PhillipCapital. Please go ahead.

Shubhranshu Mishra — PhillipCapital — Analyst

Good evening, sir. Three questions. The first one is, what is the net customer attrition we have seen in the last two odd years because of the competitive intensity? First part. Second is, is the competition also from various other NBFCs and from banks which are into small ticket personal loan and then there are small ticket business loans? And the third question is, what is the total payout to Mr. Amitabh Bachchan and Madhuri Dixit annually for brand promotion, sir?

Oommen K. Mammen — Chief Financial Officer

Your first question was about — what was the first question, Shubhranshu, can you repeat your first question?

Shubhranshu Mishra — PhillipCapital — Analyst

What is the net customer attrition in the last two odd years?

George Alexander Muthoot — Managing Director

Customer attrition.

Oommen K. Mammen — Chief Financial Officer

So first of all, there is a slide in our presentation. So if you look at, there is a customer addition of 3.3 lakhs during this quarter. And overall, if you look at the total customers — number of customers have increased by — increased from 52.33 lakh to 53.23 lakh, so that is a net increase in the customer addition and also the new customer addition numbers we have given. So the point you need to see is that, we have a large customer base, and every quarter we have been able to add around 3, 3.5 lakh new customers. So we have a large customer base, a lot of them have avail the loan and a lot of them currently not availed, which we tried to tap them on a regular basis. That’s what we give always the information about fresh loans to inactive customer.

George Alexander Muthoot — Managing Director

The customer base is, those customers who have presently a loan with us. If this is a very short period loan, it gets churned every three months, four months.

Okay, the second question was? What was your second point, sir?

Shubhranshu Mishra — PhillipCapital — Analyst

Are we facing competition from other NBFCs and contextually small ticket business loans and small ticket personal loans?

George Alexander Muthoot — Managing Director

So I don’t think people who take gold loan, definitely will also be taking some other loans also. So it is not that — because somebody is getting a small ticket loan, etc., he is substituting it for a gold loan or a gold loan substituting for that. I don’t think we have never faced such a situation, sir. About Amitabh Bachchan, etc., I think we pay some decent money to them, sir.

Shubhranshu Mishra — PhillipCapital — Analyst

What is that, as part of the opex, sir, that’s what I’m trying to get.

George Alexander Muthoot — Managing Director

I think we pay some decent money, I think that’s better there.

Shubhranshu Mishra — PhillipCapital — Analyst

Thanks.

Operator

Thank you. The next question is from the line of Pavan Kumar from RatnaTraya Capital. Please go ahead.

Pavan Kumar — RatnaTraya Capital — Analyst

So can you comment about whether the NIM have stabilized? Should we assuming that the current levels are at stabilized levels? And also, any comment on the cost of funding going forward?

George Alexander Muthoot — Managing Director

Yeah, I think we have always been telling price of about 10% I think. We should — we’ll try to keep that spread at 10%, maybe plus or minus by 0.5% is what we would like to keep. I think it should stabilize at that level, sir.

Pavan Kumar — RatnaTraya Capital — Analyst

Okay. So currently, the spreads for this particular quarter are around 10.44%. We have seen 10% should be normalized levels for the next year?

George Alexander Muthoot — Managing Director

Around the 10% should be something that we should be able to do.

Pavan Kumar — RatnaTraya Capital — Analyst

Okay, fine. Fine, sir. That was the question from my side. Thank you.

Operator

Thank you. The next question is from the line of Manan Tijoriwala from ICICI Prudential AMC. Please go ahead.

Manan Tijoriwala — ICICI Prudential AMC — Analyst

Hi, sir, just two questions. One is, how much is the accrued interest? And second, what is the proportion of this personal loan book that we are making, what will be the average ticket size? And where do you see this proportion being in the near- to medium-term on the standalone book?

Oommen K. Mammen — Chief Financial Officer

Interest accrued is INR1,843 crores.

George Alexander Muthoot — Managing Director

Personal loans are given to salaried customers. Their average ticket size is about INR4 lakhs and the book should be in the range of about INR400 crores — INR500 crores, yeah.

Manan Tijoriwala — ICICI Prudential AMC — Analyst

Sir, coming again, please.

Oommen K. Mammen — Chief Financial Officer

So the personal loan book as of March is round INR544 crores.

Manan Tijoriwala — ICICI Prudential AMC — Analyst

Right. And how much do we intend to grow it, sir, in the near-term?

Oommen K. Mammen — Chief Financial Officer

So no, we started this business almost seven, eight years back, we have been very careful in terms of understanding this business, and though, we have been running this business for last eight years, we have done only so far INR544 crores. So going forward also, we’ll do a calculated growth. We understand that this is an unsecured loan. So there is a careful policy around the personal loan business.

Manan Tijoriwala — ICICI Prudential AMC — Analyst

Thank you. That’s all from my side, sir. Thank you.

Operator

Thank you.

George Alexander Muthoot — Managing Director

So if there are no more questions, we can wind-up the call.

Operator

Sir, that was the last question. I would now like to hand the conference over to the management for closing comments.

George Alexander Muthoot — Managing Director

Thank you. Thank you, investors. They have always been a support to us. They have always given us confidence. They have always [indecipherable] us to do better and better. And from our side, we will see — we will definitely ensure that we do the best and that we take care of all our stakeholders, including the investors and all other stakeholders. So thank you. That’s an assurance from Muthoot. So good day. Thank you. Thank you.

Oommen K. Mammen — Chief Financial Officer

Thank you, Sanket. Thank you, DAM Capital, for arranging the call for us.

George Alexander Muthoot — Managing Director

Okay, thank, sir.

Operator

[Operator Closing Remarks]