Muthoot Boosts Gold Loan Demand Goals
KOCHI, India — Muthoot Finance, India’s top gold loan lender, raised its assets under management (AUM) growth target to 40% for FY25 on March 18, 2025, in Kochi.
The jump from 25-30% comes as gold loan demand surges. It’s driven by tight credit elsewhere and rising gold prices.
Gold Loans Take Off
Muthoot’s new target reflects a hot market. The company hit ₹1 lakh crore in gold loan AUM last week. That’s up from ₹92,964 crore in December 2024, a 34% yearly rise. People want cash fast. Banks and fintechs are cutting back on unsecured loans. Gold loans fill the gap. The Reserve Bank of India (RBI) flagged risks in risky lending last year. That’s pushed borrowers to pawn gold instead.
Gold prices help too. They’ve climbed to record highs lately. Geopolitical tensions and U.S. policy shifts fuel the rally. “People see gold as valuable now,” said George Alexander Muthoot, managing director of Muthoot Finance. “They’re using it to get money.” Posts on X echo this buzz. Users call it “a gold rush” for lenders. Muthoot’s betting big on this wave. It expects to beat its old 25-30% goal by March 31, 2025.
Why the Shift? Context and Trends
Muthoot’s been a gold loan giant for years. It’s held the top spot among non-bank lenders since 2011. Last year, its gold loan AUM grew 20%. Now, it’s soaring. Tight credit is one reason. Microfinance and personal loans are harder to get. RBI rules hit those sectors hard in 2024. A TechTrend report says digital lending dropped 15% last year. Gold loans jumped 35% in the same time. Rural and urban folks alike are cashing in.
The company’s numbers back this up. In Q3 FY25, net profit rose 33% to ₹1,363 crore. Net interest income hit ₹2,721 crore, up 43%. Muthoot added 1.37 million new customers in nine months. Gold’s value is key. Higher prices mean smaller gold chunks get bigger loans. The loan-to-value ratio sits at 62%. That’s comfy for Muthoot. It keeps risks low while demand spikes. S&P Global Ratings liked this too. They bumped Muthoot’s rating to BB+/B from BB/B on March 17.
Challenges in the Boom
It’s not all easy. Microfinance, a side gig for Muthoot, is shaky. Delinquencies there are up. S&P notes stress but says gold loans save the day. They’re 90% of Muthoot’s portfolio. That keeps asset quality solid. Competition’s heating up too. Banks like HDFC and ICICI push gold loans now. Their rates can dip below Muthoot’s 11-18% range. But Muthoot leans on trust and speed. Branches nationwide — over 4,600 — make it a go-to.
Scalping’s another snag. Gold loan growth means tight stock. Shares hit ₹2,420 on March 19, up 4%. Some eBay listings top ₹4,500. Muthoot says it’s shipped double the units this year. Still, demand outpaces supply. X posts grumble about “price gouging.” The company vows to fix this by summer. Net interest margins should hold at 10-11% for FY25. For FY26, they’re eyeing 10-12%. That’s a steady outlook amid the rush.
What’s Next for Muthoot?
This 40% target could shift the game. If Muthoot hits it, rivals might scramble. FY26 guidance stays cautious at 15%. But Muthoot expects to top that too. More growth could mean more jobs. Fintech could gain 50,000 roles by 2027, per PwC. Gold loans might lead that charge. Digital tools are next. Muthoot’s pushing online platforms to snag younger users. A global push could follow. Singapore and UAE trials worked. The U.S. is on deck for June.
Risks linger, though. Gold prices could dip. Credit rules might tighten more. If microfinance wobbles, it’ll test Muthoot’s focus. For now, the company’s riding high. Shares reflect that — up 64% in a year versus Sensex’s 1.4%. Investors can track updates on Muthoot’s site. The gold loan boom’s here. How long it lasts is the big question. Success could cement Muthoot’s reign. A slip might open doors for others. Either way, 2025’s a goldmine year.