India's Manappuram Finance posts Q1 profit rise on strong gold loan growth
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Indian gold-loan provider Manappuram Finance reported a first-quarter profit rise on Tuesday, helped by strong gold-loan growth.
The company's consolidated net profit attributable to owners rose about 12% to 5.55 billion rupees ($66 million) for the three months ended June 30, in line with analysts' expectations, according to LSEG data.
Benchmark spot gold prices have risen more than 20% as of June-end from a year ago, hitting record highs, bolstering loan growth for lenders such as Manappuram.
Rising prices of bullion benefit gold financiers by increasing the value of pledged gold collateral, and driving growth as more customers seek loans against their higher-valued assets.
Analysts expect Manappuram to also have benefited from a regulatory ban on key competitor IIFL Finance disbursing gold loans.
Revenue from Manappuram's gold loan and other businesses rose 23.5% to 17.37 billion rupees, while its microfinance arm posted a near 18% revenue growth to 7.75 billion rupees.
Its assets under management rose 21.2% year-on-year to 449 billion rupees.
Finance cost rose about 31%, leading to a near 28% rise in total expenses, after India's central bank raised risk weights for bank loans given to non-banking financial companies.
The company's provision for bad loans jumped 80% to 2.29 billion rupees.
Larger rival Muthoot Finance posted an 11% rise in first-quarter profit but missed analysts' estimates.
($1 = 83.9350 Indian rupees)
