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Manappuram Finance Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 FY '22 Earnings Conference Call of Manappuram Finance Limited, hosted by PhillipCapital India Private Limited.
[Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Mr. Pradeep Agrawal from PhilipCapital India Private Limited. Thank you, and over to you, sir.
Thank you, Tuja. Good evening, everyone, and welcome to quarter 4 FY '22 earnings call of Manappuram Finance. To discuss the results, we have with us Mr. V. Nandakumar, MD and CEO; Ms. Bindu Al, CFO; Mr. B.N. Ravindra Babu, MD Asivard Microfinance; Mr. Yogesh Udhoji, CFO Asivard Microfinance; Mr. K. Kumar, Head, Vehicle and Equipment Finance; Mr. Suveen, CEO Manappuram Home Finance; Mr. Vikash Kumar Mishra, CFO, Manappuram Home Finance.
I would now like to hand over the call to Mr. Nandakumar Mishmash for his opening remarks. Over to you, sir.
Thank you, Mr. Pradeep Agrawal. Good evening, ladies and gentlemen. Welcome to our Q4 FY 2022 conference call. In our last con call to discuss for Q3 results. I have a first optimism about the signs of recovery in the economy, despite the Omicron variant[indiscernible] And how we are beginning to see an improvement in the [Audio Gap] but has come down by 1.3% sequentially due to a recent satisfy competition among the NBFCs, which I mentioned earlier.
For these compete same reason, for a consolidated quarterly net profit of INR 261 crores, which is similar to as reported for Q3. Our micro finance subsidiary. Microfinance loan has posted a sequential decline in, we stand now at December 3 growth. We continue to focus on food and lending in this unsecured business due the residual impact of the [indiscernible] in the third week. We expect to resume focus on growth once the on recovery is on [indiscernible].
Our commercial vet business benefited from the economic recovery, and reported a bit quarter-on-quarter growth of 8.8% to INR 1,643 crores, while our housing finance subsidiary, grew its book by 3.5% to the INR 843 crores. Similarly, our immersion and allied business grew sequentially by 29% to the quarter to INR 919 crores. For the full details of the performance of all our business, and for a comprehensive take on our overall financial performance. [indiscernible] is over to our CFO, which is Bindhu Al.
Good evening, ladies and gentlemen, and thank you for joining us a discussion to [indiscernible] as for the quarter of financial year '22. With respect to gold loan demand, we continued with our offerings of competitive [indiscernible] to high-ticket size gold loan customers who are price sensitive.
Currently, our INR 2 lakh ticket constitutes 3 percentage of our AUM. In the light of new MFI regulations, we are in the process of building secured loan book by adding gold loans -- gold loan business. The gold loan AUM as on 31st March 2022 in a year growth stands at INR 300 crores. From an accounting standpoint, we have prudentially recognized the likely impact of RBI guidance. Accordingly, 1 significant change during the quarter has been that we have stopped considering the connections after the balance sheet date as a reduction from NPAs, even though we are technically permitted to consider up to 1 month collection after the balance sheet date. This has been the main reason for the increase in company's reported GNPA.
On a like-for-like basis, if we consider the post-balance sheet date collections as per past practice, our GNPA as on March 31 would be 1.42% versus 1.36% during the previous quarter.
Now coming to the operational overview, we are carrying surplus liquidity across all businesses and legal abilities of the group. Cash and cash equivalents on hand on a consolidated basis was INR 2,697 crores and undrawn bank line was INR 4,052 crores. Our CP exposure is only 3.9% of total borrowing in the stand-alone entity. Our ALM is well positioned across all buckets. Stand-alone borrowing cost has come down to 7.15% in -- with 7.47% in Q3 FY '22.
Our consolidated AUM for Q4 FY '22 was INR 30,260 crores, marginally down by 0.5% Q-on-Q and up by 11.2%. By -- during this quarter, we were able to maintain our AEM despite huge competition from the market. Our average LTV is 62%, which is well below the peer group. During this quarter, there was a strong focus on managing our cost position. Cost to [indiscernible] decreased from 7.07% in Q3 FY '22 to 6.48% during Q4 FY '22. Consolidated profit after tax was INR 1,329 crores for FY '22, down by 23% of Y-o-Y due to reduction in gold loan IRR in the second half of the year.
Consolidated profit after tax for the quarter INR 261 crores, similar to last quarter. ROE on a consolidated basis was 12.6% and ROA was 3% for the quarter. Our leverage is currently 2.9.
Talking about the gold [indiscernible] business, which constitutes 67% of the consolidated AUM. The remaining 33% is comprises of microfinance vehicle, housing and SME finance. Gold loan AUM decreased by 1.4% Q-on-Q, and up by 5.7% Y-o-Y. Gold holdings stood at 68 tonnes, down by 2.9% Q-o-Q, and up by 4% Y-o-Y.
During the quarter, we were able to add 3.75 lakh new customers. Our average ticket size and average duration was INR 56,568, and 82 days. advertisement has come down to INR 12.2 crores. Stand-alone PAT for FY '22 was INR 1,304 crores. Our standalone profit was INR 265, up by 2.4% Q-on-Q. The total number of gold loan customers stood at 23.9 lakh, the gold loan book at INR 20,168 crores. Our gold loan disbursements during the quarter stood at INR 30,930 crore compared to INR 24,929 crores in Q3 FY '22.
Coming to microfinance business. Asivard AUM stands at INR 7,002 crores, down by 1.2% Q-on-Q and up by 17% Y-o-Y. And this business reported a profit of INR 13 crores for FY '22, down by 20%. This quarter, MFI reported a loss of INR 7 crores compared to a profit of INR [ 60 ] lakh in Q3 FY '22. Our collection efficiency from MFI business during the quarter stood at 99%, and disbursements during the quarter was INR 1,124 crores.
Coming to Vehicle Finance business, we have reported an AUM of process INR 1,643 crores, which is up by 8.8% Q-on-Q and by 56.1% Y-o-Y. Collection efficiency for the quarter was 104% compared to 103% in Q3 FY '22. Home loan business, total book of INR 845 crores, which is up by 3.5% Q-on-Q and up by 26.9% Y-o-Y, which operates from 73 branches and reported a profit of INR 7.2 crores during the year. Collection efficiency for the quarter was 109% compared to 100% in Q3 FY '22.
GNPA brought down to 5.9% from 12.3% during this quarter, and we are compliant with the new RBI Iris loans. Loan to NBFCs at INR 31 crores, and loan to the MSME and others at INR 920 crores. Provisions and write-offs during the quarter, INR 24 crores compared to INR 17 crores in Q3. The Board declared an interim dividend of [ INR 0.75 ] during the quarter. Companies well capitalized with a capital adequacy ratio of 31%. Consolidated net stands at INR 8,368 crores. Book value stands at INR 98.9. Thank you. We can go for Q&A now.
[Operator Instructions]
The first question is from the line of Dhaval Gada from DSP.
I had 3 questions. First is relating to the pricing pressure in the gold business. If you could update what is the current situation? And your outlook on lending rates in the gold loan business? The second question was regarding the tenure mix in gold loan, if you could provide how much is 3 months or below? And how much is above that? And the third one is, I see there is a INR 63 crore fair value gain during the quarter. Is it on account of assignment in the MFI book or any other portfolio? If you could just clarify that. Yes, those were the 3 questions.
So the pricing pressure -- so we have decided that for this we believe to be prudent for us, we'll settle that. We thought we will be somewhere around 21%. So currently, our disbursement will be around 21%. So we have decided that we will stick to that. We had a discussion with some of the players, and some of the players have already told our line. And [indiscernible] said there now that like company has it, they [indiscernible] of pricing which is seen by the industry as reasonable, but [indiscernible] So we believe that gradually, the market will realize the necessity of a reasonable pricing. So this -- yes, and reasonable price war. So that -- the second thing is the question -- your second question is the mix is around -- 2/3 is in 3 months, and 30% is 6 months. And below 5% is in 1 year where the LTV [indiscernible] granted 50%.
On the [indiscernible], we did a tenant transaction, and that is the reason for the onetime income during this quarter.
Great. Sir, if I may ask a follow-up on the first question. So in month of April, have we seen further reduction in gold AUM because of maintaining the yield? Or is the portfolio growing?
Yes. It was -- during the month, it was rather stagnant, or it was flat. But maybe we have seen we are seeing slight growth. And we hope by due things will further improve. We are showing signs of the growth now. So May, there was a marginal growth. And story, but just picking up. And towards the June, what happens is without full reopening, et cetera, starts to catch up then in -- after that -- after the -- once the monsoon is over, [indiscernible] reason staff. This is out to the season for the gold loan cap. So we hope that this year, we are targeting a minimum growth of around [ 5 ]% at this pricing of and not less than [indiscernible]
The next question is from the line of Piran Engineer from CLSA.
Yes. I had some questions on Asivard. So firstly, sir, can you comment on what is the proportion of restructured loans in Asivard? Secondly, when Bindu mentioned about the change in accounting policy for NPL, has that impacted Asivard because [indiscernible] up 70 bps Q-o-Q. And lastly, how much of yield hike are we taking because of the removal of the spread gap?
Yes. So we currently -- yes. That we see well off for this NIM cap we have factored few things in pricing. One, we have factored around 3% debt to credit costs because we have taken the past 5 years including -- the include that's a demon period, and the spend have seen the cost to be on an average to be around [ 13% ]. So that is factored in the new pricing.
So on the restructuring, we have currently 12%, 12.5% book, which is still remaining at around INR 790 crores. And we had followed this -- I mean this -- for Asivard, we never considered that the [indiscernible] collection. So that way, we have not provided anything in net NPA service.
No. Sorry, I didn't get you. My simple question was, have we changed the accounting policy like a change in the stand-alone business even if you collect 1 month after the balance sheet here you reduce your NPL something like that. Have we done that in Asivard?
No, we have followed. What new IRA now, where we cannot upgrade the account to standard, even if we -- unless we collect the full collection. So we have aligned with that policy.
So we aligned with that this particular quarter? Or was it last quarter?
Current quarter. Current quarter, we have [indiscernible]
Last quarter, we have not taken that. We have taken this in the current quarter.
Okay. So that explains the increase in NPLs?
Yes.
Okay. Okay. And just on the first question, I may understand that we factored in a 3% credit cost to determine the new yields. But net-net, how much have our yields gone upside?
Yes. By 4%.
I'm sorry?
4%.
4% is seen. Earlier, it was 20.8%.
4%? Okay.
Yes.
The next question is from the line of Abhijit Tibrewal from Motilal Oswal.
Firstly, maybe for the benefit of all, if you could please explain what was that change in NPA recognition norms that you talked about in your opening remarks, which has led to such a spike in your gross, and net NPAs in the standalone business?
So as I mentioned in the opening remark. Earlier, we were taking 1 month collection was closer. And now we have stopped that. So that a spike to the NPA, which is only temporary. These are not real NPAs. These are all technical NPA, where gold is there a security. So these are realized during the next quarter. So this is -- so this will not lead to unique credit cost. So it's only a timing issue [indiscernible] first of this quarter, and that will not be repeated.
Okay. Sir, my second question was on the MFI business. I mean how do we explain the fan that we talk about collection efficiencies of 99%. And if you look at, I mean, some of the other MIs were either listed or unlisted they have all exhibited very strong momentum, talk about disbursements or [indiscernible] asset quality. But what we have reported is quite contrary to what others are seeing, at least in the MFI business. And secondly, I mean, sir, how do we explain the flip-flop that we are currently seeing in the MFI business? Second quarter of this fiscal year, there was such a sharp growth in your AUM. And then for the next 2 quarters, Q3 and Q4, I mean, we say we are concentrating on asset quality and collections, and we are seeing the MFI?
No. No, it's not a fleet lock. Yes, it is not test. -- during the past 4 months, we are seeing a collection at the rate of 100%, including AUM. So we have seen a steady decline in [indiscernible] fee. But the old restructured portfolio from that, there is now ability as some of you know that there is a core to the NPA. That is the reason.
Now the -- yes, during that quarter about dispersals. Then yes, we thought we will take a steady growth. So not only that, there was some reason also to slow down disbursals this quarter -- last quarter. The reason is there were talk about [indiscernible], it was clouded with some uncertainty. So we thought let us see how the things are panning out [indiscernible]. So now we have a new norm. Yes, we started disbursal. We are expecting a disbursal of around INR 6,000 crores this year. So it will be at a pricing of 24% [indiscernible] to us comfort. And the new disbursal -- so the new disbursals -- the collections are good on the corrections of the precise level, but we expect a credit cost of 1% extra. So that's why we have budgeted for next year's budget it. So -- we said in of the portfolio, it message rate of some [indiscernible] are so with some filters in the in the disbursal, et cetera. we hope things will improve well not, and we are targeting a reasonable profit during this year, and next year will be a full year as well as the business performance is concerned compared to [indiscernible].
So with your permission, I wanted to lease in one last question on your core gold loan business. Sir, I mean while you explained that, I mean, the recovery has been uneven in some of the unorganized sectors, and because of which the demand -- clearly, sir, I mean, looking at the kind of sequential growth that we saw in our old clearly suggests that the demand has been weak. So what in your view really explained this kind of a demand today is it because -- the core, which used to be rural customers and on and off, we keep hearing about demand being really slow in [indiscernible] India.
Does that explain the kind of demand, big demand that you're seeing right now? And also be the theme in your presentation, you talked about liquidity tightening and cost increasing leading to some of your -- other weaker peers not being able to disburse which could lead to a rising yield. But sir, are we -- I mean, you talked about some unhealthy competition between NBFCs. But very clearly, sir, I understand from at least mid-May onwards, we have seen a lot of rationalization in the unhealthy composition, which was prevalent made perhaps in January and February. So how has that -- I would say, competitive landscape which was very, very aggressive between NBFCs until March progressed, let's say, in April and May.
And sir, lastly, I mean, are we actually kind of competing among NBFCs? Or is our real competition today with banks and predominantly higher ticket size customers, and which is why, I mean, the impact that we are seeing on the intubation.
You see the first March, even though the economy after doing grow. So this is mainly because of some of the demand from the formulas. -- the formal sector and the apparel class. So the bottom of the pyramid that demand is still -- it is -- that is a regular -- so then we can definitely see this in rural areas. The spend for social functions like festivals, [indiscernible] has come down drastically. So their income is improving slowly. It is expected to improve with investments in a sector, et cetera, et cetera, as planned by the government testified is totally improving. So once the demand is caught up there, I think the rates are -- the pricing is to go up.
There is a good part is there is a growing realization among the NBFC that there should be a better visualization as far as pricing is concerned. The second part is, the competition -- with the competition was in [indiscernible] between NBFC and the bank. See, the bank customer and the BSC customer as far as [indiscernible] concerned, the requirements are different. [indiscernible] profile also to some extent, different even for some more later. So the requirement -- there is different business, and a those who want a short-term loan, say, 1 month, 2 months, 3 months, et cetera, will not be at 2 days going to a bank for daily wages are, for example, loss around INR 1,500 to INR 2,000, if he goes to a bank by actually wasting his full day, that even the customers for a larger ticket for a short late ticket also for a shorter customer.
So we have seen all these years, particularly in aware that about all these are very high amongst the population like Kerala. The NBFCs are on [indiscernible] because of this reason. With the difference is more than the quarter approach and leading institutions whether a bank or a nonbank. Deep somebody wants for a long term -- yes, a 1 year set or 2 years, et cetera. So he has a reason to go to bank than is today. So essentially, the competition among -- so NBFC is started, we are cutting the base, yes. And NBFCs also felt like there is a rational competition. So to some extent, we have talked that -- so the another thing for this competition, as I have highlighted in my earlier discussion, there was availability of money for sales.
It's the banks are [indiscernible] funds, et cetera. And also the policymakers, the test was also to if the rates are lower and make the money available to [indiscernible]. So now because of inflation that trend we're seeing now, some indicative rates have gone up by 40 bps. And again, we all believe that it is likely to go further in [indiscernible] Sure. So the mindset is stage -- so the rates are increasing. Now I hope it another 1 quarter the demand from the bottom of the perimeter would pick up thereby the rates will go. So this I believe that is our rate cuts like this is a temporary. They may not last for long.
The next question is from the line of Shubhranshu Mishra from UBS.
A couple of questions, sir. One is...
Sorry to interrupt you Mr. Mishra. May I request you to speak a bit louder, sir.
Can you hear me now?
Yes, please go ahead.
Right. The first question would be on the yield. So we've seen a yield compression alongside we've also seen the online gold loan proportion going back to what we were around 3 years ago.
So are these the normalized levels looking going forward around 19%, 20%? And if you're looking at the ROA from 5.5% to 6%, are [indiscernible] the normalized levels of ROE and field going forward? That's the first question.
Second is on Asivard, are we looking out for a strategic investor in the microfinance business for some incremental capital deployment. That's the second. And third of the data keeping question was the accrued interest for this quarter?
So as I mentioned earlier, we are currently settling down at [ 21% ] yield in gold loan. So we feel like this will launch other APs, which will also slowly come back. We are targeting a yield not less than 5%. So this is our target. So our consolidated ROE is down primarily 1 reason -- major reason means not only the reduction in the ROE but also microfinance sector, which is substantial for us. The [indiscernible] important is from startup to reporting profit as the reason.
So the micro finance roustabout our capital requirement. Yes. Targeting a growth of around 20% in the MFI business. So that we prefer to have these capital, but the situation is fast improving now, many bankers also approach us exciting about opportunities in the sector, et cetera, et cetera.
We are seriously cut above the option of raising capita. So in between, if any capital requirement is the parent capital [indiscernible] we have a very high capital adequacy ratio in the parent company. So it's in a situation. So if the situation of warrants, we will do that. But the capital adequacy of the Asivard itself is around 20% or 30%. So there is enough room to raise capital, and then our investors are available for investing there. So to meet the target of [ 50% ] growth in FY '23 actually, for want of capital, we did not start that get a growth, which is available on any emergency [indiscernible]
Interest accrued INR 420 crores, that is around 2 percentage of gold loan India.
That's 2% you said, no?
Yes.
Okay. Just one last question. I didn't follow the deals that you have a spoken about, you said 22% would be the normalized deal going forward? That's what the growth...
Disbursal yield is at [ 21% ] now dispersal. And we hope to maintain over 20%.
The next question is from the line of Shweta Daptardar from Elara Capital.
A couple of questions. The first one is on Asivard Microfinance. So ma'am, you mentioned that post removal of interest rates from the regulator what are the current is and what were it prior to that? And therefore, what is the leg up on the ROA, if any?
We are and ROE of around 20%, not less than 20% of the microfinance business. So every year is there certain frequencies, we see some such challenges we have like natural calamities, et cetera, which is actually disrupting is taking all these into account, yes, we are pricing the product that's around 21%, which [indiscernible]
24%.
24%. Yes, for which the rationale is already published.
So in the past, the cost of borrowing was 10.3% and with margin gap, our lending rate was 20.35%. Under the new regulations are in to charge only for consider increase the credit cost in [indiscernible]
Okay. And do you believe this increase in yield, the entire benefit will flow in this year? Or how is it like?
We are disbursing around nearly INR 500 crores plus every one. So yes, so there is a portfolio in. So total dispersal is expected to be around INR 2,000 crores. The portfolio expected in microfinance this year is around INR 8,000 crores. So out of that, around INR 6,000 crores. So -- would be the -- yes, with the new yield, also [indiscernible] this year carry that [indiscernible] crazy.
Okay. Okay. Understood. The second question is on gold financing Sir, I remember you mentioned last quarter and even earlier that this sort of lower rate phenomenon is going to be very temporary. But today, if I hear out your commentary, you're mentioning that you will be maintaining around 20%, 21% for quite some time now. So do you see -- I mean, you have answered this question even in the earlier part of the conference call, but still -- so do you see the competitive intensity continue to flaring up and therefore, you will continue to take it on your views and therefore, the pressure on net interest margins in the stand-alone, especially on the gold loan side, will remain for a while?
What I told is settling at around 21% for now. So working the market into spending mode. So a few reasons also I highlighted here. One reason is a small ticket, which is coming from the bottom of the pyramid. Their demand has come down because of the situation in the economy. So they are expected to -- the demand there is expected to revive in another 1 quarter.
So that will be an opportunity to get an increase the yield in the [indiscernible] There is a competitor is because the customers have come down because of this situation, part situation, the demand has come down. So second thing policy vehicles have decided that should be a burden maturity assisted and [indiscernible], it is released. The one thing the increase the cost of the funds are going up 40% [indiscernible] is there or the indicate [indiscernible] and with the rising inflation is likely to go up, et cetera. And slowly, the tightening also not to happen. So these are something which is expected in the within near future. So these things could reverse trend. So accordingly, the pricing also would be desired.
Understood. Sir, the last question from my side. If I look at your OGL loans, so there the ticket size has gone up. So anything to read on that, which is quarter-on-quarter, the increase is slightly meaningful?
So the GL was high during the lockdown period because the [indiscernible] other conventional loans also have been shifted to [indiscernible] offices or to [indiscernible] Now when all the offices are closed and oppression were stored to the pre-COVID level, people would love to come to the office. So that's why the deal is not showing growth in the recent day.
No. What I meant was the average ticket size has actually gone up on the OGL business. So what do we read into that?
So they'll see the ticket size of a company also have rolled on business software has gone up. Corresponding there is an increase in OGls bi also.
The next question is from the line of Dhaval Gada from DSP.
Sir, a couple of follow-ups. So one is on gold branches. So on the presentation, you've restated the third quarter gold branches. So I just wanted to reconfirm is this the Asivard branches, which now get classified under gold branches? And then the other question was on advertising and promotion expense, if you could provide that for fourth quarter and the full year. Yes.
So in the parent company, there is no increase in the branch network. In 1 brand, we have opened branches in sea. Because yes, there is an opportunity to take a secure on 8% now because of the same regulation. So for that, a branches may not be rooted on anything is all be there. So we start up in other 300 places, with [ 300 ] new branches [indiscernible]
Yes. So as we discussed in the last quarter, Q3, we were aggressive in advertisement spend because we are not spending much in the past. And that we could get the benefit during the 2 quarters, 1 year quarters. So this quarter, we rationalized expenditure because as the brand is established, then it will be more of a recall after that. And this quarter, we have done the rationalization as guided in the Q2 call.
Right. So ma'am, how much was the amount for 4Q?
INR 12 crores.
INR 12 crores. Okay. And for full year, it would be how much, approximately?
INR 89 crores.
INR 89 crores. Okay. And just to reconfirm, sir, you mentioned 300 branches in Asivard on the gold loan side, correct?
Yes.
Okay. And sir, in the earlier part of the call, you had given a guidance for gold on growth, AUM growth -- if you could just reconfirm that. I thought I missed, probably, the number.
Yes. So April, the growth was flat. May we see some growth. And June onwards, so we expect the growth to pick up because by that time, we expect lower models than bottom [indiscernible] because they will pick a [indiscernible] rural idea. So we are seeing indication on the basis of that what I expect is in Manappuram Finance, we expect gold loan growth is to be around 10%. This is the year 2022.
And overall -- 10% in gold loan, and overall consolidated AUM expectation for '23?
No. We expect that to grow by 15%.
Understood.
Some of the businesses are growing well in non-MFI non-gold business, the dispersals are around INR 300 crores -- INR 250 crores to INR 300 crores. We hope that will pick up further.
The next question is from the line of Aalok Shah from MCL Group.
A quick question on the stand-alone business here. Historically, if you look at the ROEs that we have been doing on a stand-alone business, it's been in excess of 20%, also. What is the management stance on taking this number, which is now probably at 13%, 14%, back to 20% level? And how far -- or how quickly should we be in those numbers, on the stand-alone ROE side?
It is the effect of the pandemic. Sorry, economy has gone to a still situation. Now it is a recovery. So expecting a recovery and the situation and locked down is expected to -- so the lockdown situation is not tax quarter too. So it's a -- because of that, we are expecting 10% growth there. And other businesses are expected to grow over 20%. And the asset quality also would be good. And why we are expecting ROE of 20%. So the other businesses also -- which has already established a strong footing is likely to grow and report would [indiscernible] Yes. MFI has come back, that can solve ROE to 20%.
I was looking more on the standalone ROE. But okay, let's me put it another way.
I tell you your standalone things are improving when the yield disposal yield what we realized towards the last quarter around [ 28.6% ]. So it is expected to increase by 150 bps to 200 bps going forward.
Sure, sir. And a question here as an extension to the gold loan book. We understand that 33% of our portfolio is to loans above INR 2 lakh, and incrementally, we are going to land at 21%. So is that what we will do for, say, like INR 2 lakh and above ticket sale loan or that book will be at a lower yield?
Yes. That will be a lower yield the blended yield is what I have said to be around 21%.
Sure okay. And this 33% of book, which is to like INR 2 lakh and above. This number was at what percentage, probably a quarter or a year back? Just to understand the yield impact because of [indiscernible]
That was around [ 33% ], no?
[ 29% ] [indiscernible] the past quarter it was 29%, and now it is 34%.
sir, pre COVID?
Pre COVID, it's 19%.
So we've moved a long way from 19% over to 29%.
Correct.
Okay. Sir, can I have this number for FY '21? Sorry, that this could be too much.
[indiscernible] stable in the [indiscernible] 31 March also, 19%, 29%.
Okay. Okay. So 19%, 29%.
Yes. Over INR 15 lakhs [indiscernible] for now -- sorry, over 2 lakh [indiscernible] gone up now. Below INR 1 lakh have come down. because of the reasons of lower demand, this is the situation of the economy, which is expected to improve in the coming months.
And on the duration side, I missed that point. You said that 30% of loans are to customers with duration about 6 months. Make us understand.
[indiscernible] months, and [ 8% ] up on 1 year. And 55%, 3 months.
So over a period of time, you've seen this mix shifting from beyond 3 months to 6 months and 1 year. Is there some kind of a strategy that we planned?
It is not because of the [indiscernible] yes. Those who under lower the LTV second [indiscernible] is lower. 6 months is still lower. Yes.
So okay. This helps my questions on the gold side. Sir, on the MFI book, I was just trying to understand that you spoke that you upped your yields by 400 basis points to something like 24%. Now when I look at the largest MFI lender, these yields are relatively much lower to us. .
So at 24%, do we stand to kind of compete with the largest player in the MFI space?
See, 2 things are here. One for the MFI customers, more than the interstate, the service is most important. The proximity to the customer is close to [ 1% ]. So if we have the people, the service on for multitouch size, the customers want go elsewhere. So the customer loyalty [indiscernible] the -- yes, because of that, I don't think I don't expect there will lose customers.
Sir, is there a strategy in if you can share on how to kind of go out and add more customers on the MFI side? Because if I look at point-to-point numbers, they probably are flat or marginal growth Q-o-Q and Y-o-Y. So how do they kind of look [indiscernible]
Yes. So as your question earlier, do the previous quarter, there was a quantum for the disbursal then we have come down. So the reason is -- we anticipated, 1 more we were successful and been doing bad assets luckily for all of us -- so the previous quarter, we didn't have such idea, so that was some of the disposals have come down to around INR 500 crores per month on [indiscernible] annually, that's what budgeted. We said we expect a growth of [ 20%, 21% ] only. So we are sure to get it because we are mostly targeting our own good customers. And we are on board the new customers. And whatever we have seen in the past, we are prospective filter whereby the quality customers are handling around March.
Right, sir. If I could squeeze in a last question, that's on the accounting of NPA. If -- what is that NPA number on the MFI portfolio? You've seen that move from 2.8% to 2.5%. And this [indiscernible] change in NPE accounting policy, that number would have been at?
Yes. So for new IR norms, what we implemented, which we announced in November that contribute around INR 20 crores of additional NPA for us. So that -- so currently, it stands at 3.5%, and including -- excluding that it would be 3.2%.
The next question is from the line of Shreepal Doshi from Equirus.
Sir, the question was what is the revised lending rate in the MFI segment post the spread cap removal? And what's the range now?
24%.
24%.
24%. Right. [indiscernible] of around 24%
Earlier that would be?
It was around [ 20.5%. ]
Okay. Sir, the second question was what is the disbursement in the MFI segment for the fourth quarter?
New revised rate lines outcome, our stock [indiscernible] to be updated, et cetera. Now we have [indiscernible] lending under the new regulatory regime. So we are disbursing around INR 500 crores per month, and our collections are around INR 300 crores that principle. So the monthly net growth is expected around INR 150 crores.
Okay. So the 4Q disbursement would be close to INR 1,500 crores, is it?
INR 1,126 crores.
Yes. Yes, it is expected to be an [indiscernible] INR 1,800 crores. Around INR 2,000 crores. Yes. A.
Yes. [indiscernible] expected disbursement is INR 500 crores per month.
Yes. [indiscernible] growth and ad growth is what respectively is around INR 1,800 crores. So INR 2,000 crores.
Okay. Sir, just something that like we've seen some of the lenders in the MFI space operating in [indiscernible] there also seeing power numbers coming down and the 4Q overall was a good quarter for lenders across India in MFI. While we have seen bar number increasing and even our loan book has also behaved in a little different mandate part of growth. So what explains this difference here. And the other part was you have highlighted that we see the MFI business at 24%, 25% ROE. So while if I look at the last 5 years, the ROA and ROE has not been so well as compared to peers in this landscape. So what gives you this comfort going ahead?
So the par is coming down. The par has come down. Drastically, it has come down. It has not gone off during normal time, the company was getting an ROA of around [ 20%]. And the ROE of over [ 21% ]. So during the periods like demand all this spend equally, it has clocked is a scenario of the industry. So the collections are doing good. And as I mentioned, during the last 4 months, we are getting a collection of 100% within routes overdue collections also. So the challenge here is from the restructured portfolio, which is -- where is the industry as a whole.
Sir, what percent of the restructured portfolio would be out of moratorium now?
Yes. We have not offered any moratorium to restate except for the month of July. So there is no moratorium -- no customer is under [indiscernible].
The next question is from the line of Rajiv Mehta from Yes Securities.
Sir, firstly, what is the current minimum rate for gold loans in a branches save for a low decade loan of INR 50,000 to INR 1 lakh and taking a 65% LTV what will be the minimum rate you'll be offered in our branch.
So the rates starts for just 10% to 20%. This is a road ticket for short term, 20%. And last tickets [indiscernible] yes. And the blended yield is expected to be -- so we take into account of the dispersal yield on a daily basis, taking into consideration of the trend of [indiscernible] foresee, cetera, which is faced by the system on a daily basis. On that basis, the disperse on yield now is around in Q1 [indiscernible] That's the blended yield.
Got it. And what is now the customer response to the now higher rates for gold loans, say, in typically urban or semi-urban branches because we stopped that 6.9% scheme in March. And now I believe the minimum rate you spoke about 10%, 12% -- so are we seeing that inquiries or footfalls have gone down in branches? Or are we seeing that loan conversions out of the incoming inquiries or footfalls that ratio coming down?
Yes. We did say it has come down to some extent that way, if the same basis continued perhaps we would have grown by around 38% during this quarter. That was the time then. Yes. So that the...
So there is an impact.
Yes. There is an impact because of that. So that's what I told you, yes, so you want to protect. What I believe that should be protected is a reasonable pocket to the company. And I am targeting an ROE of around 20% in this business. So rather than indulging in the price war, I thought I should say it's around 21%. That this has been. And there is some realization among the players. That they also have reached, and we expect most of them to come up to this level sooner than later.
Hopefully, the situations are also seeing our rates are going up. The indication that it will go up. And that we are tightening also. So 1 reason was easy money. There, we'll have to have that. So this is the reason why you look for higher pricing. So whenever we increase we are likely to lose business, and we have lost business, a new business instead of 25% growth is during the quarter which would I would expect -- would have been expecting -- would have expected if we continue with the same pricing. That's not happened now.
Okay. And sir, in the light of the current dynamics, are we trying to -- or are we thinking of adding more customer acquisition efforts, via channels since we would want to grow at 10%, 12%, even with 21% yield and given that competition is looking quite strong or solid, are we then looking at utilizing more channels or creating more channels of acquiring customers or attracting customers so that we eventually have higher inquiries and higher footfalls and then we can convert as per our growth target. .
So what I'm expecting there will be some profits. -- seasonable is the sense that I restart and the long profit will be at an ROE of around 20%. So I'm giving more important to that because, as I mentioned earlier, and I feel like the price war is simple. And so it will be back the price war will be over sooner than later. That's why it's not taking the lead. And then the customers will come back and others are also falling in line. The customers are expected to come back.
Sir, any thoughts on brand expansion plans? I mean are you looking at it in a different light now for -- required for growth or we will be, again, very -- adding very limited branches?
So we have applied to reserve to open around the end of mora application has not been considered because from a loan company. We need to see before [indiscernible] loan companies means for is over 30%. So we are applied and the competition on companies of lies. So for some time, maybe because of elements, the approvals have not come and they expect the growth to come towards second quarter, et cetera. And whatever permissions from an accordingly, we'll offer tractors. Since now we are -- I am not in a position to tell you how many brands all this and on to the RBS fact. .
Okay. Okay. And just lastly, 1 clarification on collection efficiency number of 99% in microfinance for fourth quarter. That includes the restructuring portfolio, right, because that is being made?
Yes. yes. [indiscernible] things have come out at [indiscernible] of market.
All customers are built. We are not given much more about the [indiscernible]
Okay. And this will be including the earlier, right?
Yes.
Yes.
Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Pradeep Agrawal for closing comments.
Thank you, Sujal. On behalf of PhillipCapital, I would now like to thank Manappuram Finance management team of napa Finance and all the participants for joining us on the call today. Thank you, and have a good day.
Thank you. Thank you for your questions.
Thank you. On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.