LIC Housing Finance's non-retail loans may throw up negative surprises

Asset quality worst in four years, though loan growth steadies the ship

As Murphy’s Law goes, whatever can go wrong will go wrong. This played out in the case of LIC Housing Finance (LIC HFL). Despite the developer loan book not being too material, the housing finance company’s asset quality touched a near-four-year low, with gross non-performing asset (NPA) ratio at 1.98 per cent in the April-June quarter (first quarter, or Q1).

Much of the pain has emanated from its non-retail loans — the share of which stood at 24 per cent in Q1. While at these levels, the share of wholesale loans is similar to that of its peers — HDFC