Muthoot Finance Ltd

Dear Shareholders,

It gives me immense pride to present the Annual Report for FY 2024-25. This year tested the resilience of global economies and institutions yet stood as a testament to the strength of India's growth story and the critical role of Non-Banking Financial Companies like Muthoot Finance in furthering it.

At Muthoot Finance, our journey has always been rooted in trust, responsibility and unwavering purpose. Over the decades, we have built a model of inclusive finance — not just delivering credit but enabling livelihoods, aspirations and resilience. This year, as economic and credit cycles evolved, our long-held conviction in the value of secured, accessible, and ethical finance proved stronger than ever.

FY 2024-25 marked a significant milestone in your Company's journey. Amidst a challenging and uncertain environment, Muthoot Finance delivered a remarkable performance across both financial and non-financial parameters. This achievement reflects not only our operational excellence but also the strength of our purpose.

Such resilience is rooted in the solid foundation laid over eight decades ago, a legacy built on trust, integrity and responsibility. Today, that legacy continues to guide us as we grow with purpose and discipline. By balancing progress with prudence, we are building a future-ready institution, one that remains a steadfast financial partner in Bharat's rise in the global economic landscape.

Despite global volatility and tightening financial conditions, India stood out as the fastest-growing major economy, with a GDP growth rate of 6.5%. The macro narrative was driven by robust domestic demand, particularly in rural India, strong services output, a record $825 billion in exports, and continued momentum in infrastructure investments.

Private consumption rose by 7.3%, contributing its highest share to GDP in over two decades. This growth was not just statistical; it reflected rising aspirations, deeper formalisation, and expanding economic participation across socio-economic strata. For a financial institution like ours, operating at the intersection of tradition and transformation, this evolving landscape presented both immense opportunity and responsibility.

Amidst this vibrant economic milieu, NBFCs emerged as resilient and agile drivers of credit expansion. With net advances growing at a healthy 20% y-o-y to Rs24.5 trillion and total loan AUM touching Rs28.2 trillion, NBFCs significantly outpaced the banking sector's credit growth of ~12%.

More than just growth, this performance reaffirmed NBFCs' role as indispensable enablers of last-mile credit. Even as overall credit growth moderated to ~13–15% due to high base effects and regulatory tightening, NBFCs maintained momentum, especially in retail and secured lending.

Yet, the year was not without its complexities. Emerging stress in unsecured segments like microfinance and personal loans, with stressed microfinance assets climbing to 5.9% by March 2025, called for sharper risk calibration and operational discipline. Within this context, secured lending and gold loans in particular stood out for their stability and strategic relevance.

FY 2024-25 will be remembered as a defining year for the Indian gold loan industry, as gold loans emerged as the fastest-growing credit category.

• A sharp increase in gold prices (over 30% YoY), raising collateral value and enabling wider visibility as a borrowing option for the common man.

• A natural shift from unsecured to secured credit amid regulatory tightening.

• Behavioural shifts that redefined gold — from a cultural store of value to a dynamic financial asset.

For households in semi-urban and rural India, gold loans offered timely liquidity, financial dignity, and security. For lenders, the high collateralisation and short tenures translated into prudent risk profiles.

As a pioneer in the segment, Muthoot Finance welcomed this transformation. It reaffirmed the essential, future-ready nature of our gold loan franchise, built on deep customer relationships, ethical governance, and expansive last-mile access.

Even as the gold loan market surged, the sector faced funding constraints. Despite their strong credit performance, bank lending to NBFCs grew only limited, indicating cautious liquidity flows. This dichotomy underscores the need for diversified funding models and greater institutional recognition of the gold loan asset class.

Interestingly, even banks deepened their exposure to gold loans, with outstanding bank gold loans more than doubling during the year. This shift illustrates gold-backed lending's systemic relevance and underscores the need for regulatory clarity and capital efficiency norms that align with its risk-adjusted strength.

At Muthoot Finance, we remained confident in this opportunity, not just as a product of the moment, but as a structurally resilient, counter-cyclical financial solution.

While gold loans form our core, our broader financial services ecosystem continues to mature, offering customers integrated solutions and adding strategic depth to our portfolio.

• Belstar Microfinance Limited recalibrated its operations in response to industry headwinds, maintained credit discipline, and laid the groundwork for secured lending through gold-backed microcredit.

• Muthoot Homefin (India) Limited expanded access to affordable housing finance in Tier II and III towns, supporting economically weaker and low-income groups with responsible housing credit.

• Muthoot Insurance Brokers continued to scale its health and life segments, ensuring protection-led financial inclusion.

• Muthoot Money Ltd. transitioned its operations from vehicle finance to a pure play Gold Loan NBFC strengthened its footprint across 21 states and 5 UTs.

• Asia Asset Finance PLC, our listed Sri Lankan arm, furthered our regional diversification, offering gold, SME, and leasing products across 100 branches.

Together, our subsidiaries contributed 13% to our consolidated AUM and 4% to PAT — a clear testament to the health, relevance, and sustainability of our diversified business architecture.

FY 2024-25 was also a landmark year in our digital journey. Our investments in cloud-native architecture, API-first systems, and AI-driven decision-making enabled us to scale more efficiently, respond to customers faster, and enhance service quality across channels.

Our upgraded iMuthoot app, doorstep-enabled Loan@Home platform, and products offering dynamic limits, 24/7 access, and interest-on-utilisation exemplify this shift. Together, they place financial control directly in the hands of our customers, offering convenience without compromise.

As we transition into a hybrid model of phygital engagement, we continue to blend our legacy of personal trust with the speed and scalability of digital innovation.

Even as we expand and digitise, we remain deeply committed to social equity. Our community initiatives, guided by the IRECS framework: Inclusiveness, Relevance, Efficiency, Collaboration, and Sustainability, reached over countless beneficiaries this year, spanning healthcare, education, environmental sustainability, and rural empowerment.

From scholarships worth Rs13.40 million under the Muthoot M George Excellence Awards to clean water initiatives, diabetic care centres, and housing projects under Muthoot Aashiyana, our CSR efforts reflected our role not just as a financier but as a societal partner.

We also responded to national imperatives, distributing school kits, promoting solar energy, and providing disaster relief where needed, proving that responsible business can be a powerful force for development.

At the heart of our achievements are the people who make them possible. This year, we invested in building a future-ready workforce through digital hiring platforms, leadership development, succession planning, and the Pathshala internship programme.

Under Project Pragati, we reimagined our HR frameworks, digitised core functions, and fostered a culture of merit and mobility. Our recognition as a Great Place to Work (fourth year running) and FICCI's award for women's empowerment are affirmations of our employee-first, inclusive ethos.

As we look ahead to FY 2025-26, we are conscious of both the opportunities and responsibilities that lie before us. The gold loan market continues to expand, offering both counter-cyclical strength and social relevance. Our diversified model is well placed to manage risk and create value. Our digital foundation enables scale with speed. And our purpose to provide safe, ethical, and accessible finance remains our North Star.

In a rapidly evolving environment, what sets us apart is not just what we do, but why we do it. At Muthoot Finance, we remain guided by a vision of shared prosperity, one that includes every household we serve, every community we uplift, and every stakeholder we work with.

On behalf of the Board of Directors, I extend sincere gratitude to our customers, employees, investors, regulators, and partners for your continued trust. Let us step forward together — responsibly, inclusively, and with conviction.

Warm regards,

Chairman & Whole-time Director