 "LIC Housing Finance expects to report 15% improvement in FY25 loan book")
LIC Housing Finance is expected to report 15 per cent improvement in loan book during the financial year 2024-25 (FY25), said Tribhuwan Adhikari, managing director (MD) and chief executive officer (CEO).
It plans to increase its affordable housing loan portfolio to 25 per cent in two years from 10 per cent now.
The disbursements in the third quarter of FY24 were at Rs 15,184 crore, 5 per cent lower from Rs 16,100 crore in the year-ago period. This moderation was on account of technological upgradation and organisational revamp undertaken by the company during the financial year.
“This year has been a year of consolidation for LIC Housing. In the beginning of the year, we went in for a major technology upgrade and overhaul of our organisational structure. Later, in August, there was a leadership change. Hence, there is slightly less satisfactory growth on the loan book,” said Adhikari in an interaction with the media.
“But all these things are now over. I think in Q4 (FY24), you will see a much better growth in the loan book. I foresee significant growth in the loan book in Q4. FY25 is going to be the year of delivery for LIC Housing Finance,” Adhikari added.
The company’s net profit increased by 142 per cent year-on-year (Y-o-Y) to Rs 1,162.88 crore from Rs 480.30 crore in the year-ago period.
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Net interest income (NII) stood at Rs 2,097 crore, 31 per cent higher than Rs 1,598 crore in Q3 of FY23.
Further, he said the demand for the overall housing segment continues to be healthy, and it will turn its focus towards the affordable housing finance segment in FY25.
Also, the recent announcement by the finance minister for 20 million houses under the PM Awas Yojana during the interim Budget is expected to give an impetus to growth of the segment.
“At present, affordable housing is 8-10 per cent of the portfolio, and we are targeting to take it to 20-25 per cent of the loan book in two years,” Adhikari said. So far, the company’s main focus was on salaried class and individuals with high credit scores.
He also spoke about the interest rate situation saying that there is an ‘interest rate war’ when it comes to lending for projects with the industry seeing lending rates at 8.75 per cent.
The overall asset quality showed signs of improvement with gross non-performing assets (GNPA) slipping to 4.26 per cent in Q3 FY24 from 4.76 per cent in Q3 FY23.
At the same time, of the total Rs 7,500 crore worth of project loan portfolio, 34 per cent was GNPA and despite there being a lot of demand, the company is very cautious of the segment.
“A lot of big builders have come forward trying to resolve these issues. Some of these cases are in court, IBC and NCLAT. Some cases are near to resolution, some still in the legal process. I expect the asset side to improve in the coming quarters and the next financial year also. Every quarter-on-quarter, there will be an improvement in the asset quality,” Adhikari said.