Strong Disbursements in Q2 helps LIC Housing Finance to post decent set of numbers.

Q2 FY22 Conference Call Highlights: 

Business Highlights:

• Total outstanding Loan Book is 2,37,660 crores as on 30 September 2021. A growth of 11% Y-o-Y.
• Individual Home Loans portfolio grew by 15% Y-o-Y. It is showing healthy signs of growth and the same growth can be expected in the upcoming quarter as well.
• 79% of the total portfolio was towards housing loans as against 76% Y-o-Y. Growth was seen in all the segments and across all the geographies, especially in Tier 2 and Tier 3 cities.
• Achieved a level of 132% of pre covid levels in terms of Q2 disbursements when compared with Q2 of Last year.
• Asset quality would continuously improve over the coming quarters.
• Disbursements in project loans were 353 crores.
• Reduction in cost of borrowings of 12 basis points in Q2 FY22.
• Incremental cost of borrowings is at 4.95%.
• Preferential issue of equity allotment of 2,335 crores to the parental and promoter company completed in the Q2 FY22.
• Reversal of Interest amounting to Rs. 250 crores were seen in Q2 FY22 due to One Time Restructuring ( OTR ) impact.
• This reversal of interest in the upcoming 2-3 quarters but the quantum impact will be lower.
• For every 100 crores of reversal of interest there is an impact of 16-17 basis points on NIM’s.
• One time impact of 45-46 crores towards retirement benefits in Q2 FY22.
• OTR’s are almost 3.25% of the total loan book. Because of OTR’s there can be an increase in provisions in the coming quarters.
• NPA’s are comfortable now when compared to previous quarters and in terms of Asset quality as well.
• Collection efficiency to be maintained at 97-99% in the upcoming quarters.
• Stage 3 NPA are 3.25 for individual housing, non-housing commercial is 14.83%, 9.83 non housing individual, Project developer 23.94%.
• Out of the total 7,300 crores restructured, most of them are in Stage 1 and Stage 2.
• Home Loans rates are 6.90% and very good volumes are seen in home loans and almost back to pre -covid levels in this segment.
• Volume of NPA came down in the tune 1,500 crores in this quarter which is a very good sign.
• Out of the total Portfolio, 50% is from tier 2 and tier 3 cities.
• Top 7 cities constitute approx. 43% of the total business.
• OTR stage 2 loan book is split between Individual builder loans in the tune of 62 crores and retail category in the range of 2,078 crores in Q2 FY22.
• Targeting NIM in the range of 2.5% from the next financial year.
• More focus in the upcoming quarters is on the stability of spreads.
• Upcoming H2 will be better than H1. And Q3 and Q4 will be more better than Q2.
  
  

Collaborations and Tie-ups:

• Company had a tie up Indiapost payment bank for its loan disbursements in affordable housing segment.
• This tie up will help the company to increase its reach in Tier 2 and Tier 3 cities.
• Continuously monitoring tie-ups and collaborations. Few are currently in the pipeline and company are open if there are any such new opportunities to increase its reach and presence.
  
  

Governmental Support:

• Better support from the government is received till now and the same is expected to be received in the affordable housing segment in the upcoming years.
• Better prospects are expected in the affordable housing segment owing to better budgetary allocations from the government in the future.
• No challenges are been seen for this segment in the future 3-5 years.

 
Please find attached for detailed analysis.

Originally Published On: https://blog.investyadnya.in/strong-disbursements-in0q2-helps-lic-hsg-fin-to-post-a-decent-set-of-numbers/