LIC Housing Finance on Tuesday said its net profit for the quarter ended June 30 fell 11 per cent to Rs228 crore from Rs257 crore in the corresponding period of the previous year.
“The drop in net profit is primarily attributable to the decline in the developer loan portfolio compared with the previous year and a lower-than-expected developer loan disbursals on account of the overall economic scenario,” the mortgage lender said in a statement.
In addition, rise in finance cost, higher provisions and lower other income also contributed to the decline in earnings. Total income grew by 25 per cent year-on-year to Rs1,767 crore during the three-month period.
Net interest margin for the quarter narrowed by 26 basis points to 2.18 per cent on account of lower income from developer loans.
“Business environment has been very challenging...Margins have been under strain owing to the high interest rate regime and high borrowing costs that has prevailed during quarter,” V K Sharma, director and chief executive of LIC Housing Finance, said.
He added that despite tough environment the home finance company was able maintain its credit quality.
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The gross non-performing asset ratio declined by 13 basis points to 0.71 per cent while net bad loan ratio improved marginally to 0.38 per cent at the end of June 30, 2012.
LIC Housing Finance closed the quarter with outstanding mortgage portfolio of Rs65,644 crore. The portfolio expanded by 24 per cent.
Individual loan portfolio was up 28 per cent at Rs62,602 crore. Developer loan portfolio declined by 24 per cent year-on-year to Rs3,042 crore.
“In the first quarter, developer loan disbursals have started to improve, which is likely to help increase the margins going forward. The asset quality of the company continues to be good even in this environment,” Sharma said.