Capitaline

Analyst Meet / AGM 06-May-19

Conference Call

LIC Housing Finance

Targets loan book and disbursements growth of 15% for FY2020, improve asset quality by September 2019

LIC Housing Finance conducted a conference call on 06 May 2019 to discuss its financial results for the quarter ended March 2019. Vinay Sah, MD&CEO of the company addressed the call:
Highlights:

The company has maintained its growth trajectory in the FY2019 despite severe challenges in the financial sector in terms of tight liquidity conditions. The loan book of the company has increased 16% to Rs 194646 crore end March 2019 over Rs 167467 crore end March 2018, driven by core individual loan portfolio rising 14% to Rs 181569 crore end March 2019 from Rs 159350 crore a year ago. Developer loan portfolio increased to Rs 13077 crore end March 2019 from Rs 8116 crore end March 2018.
The disbursements increased 7% to Rs 18649 crore in Q4FY2019, with disbursement rising in the core individual home loan segment by 18% to Rs 12448 crore, while disbursements in project loans were lower at Rs 2031 crore as against Rs 2266 crore for Q4FY18.
The total disbursements for the company moved up 12% to Rs 55315 crore in FY2019 from Rs 49379 crore in FY2018 with disbursements in the individual home loan category rising 10% to Rs 37618 crore from Rs 34318 crore.
The company is selective and taking exposure to only quality projects in the developer loan book. The company maintains its focus on developer loan segment and targets disbursements of Rs 8000-9000 crore for FY2020 as against Rs 7128 crore (across 105 cases including part disbursement to earlier cases) in FY2019.
The company is targeting loan book growth as well as disbursements growth of 15% for FY2020.
During the year, the company has done exceptionally well in the area of affordable housing wherein more than 45000 accounts were disbursed. The company would be opening 9 new marketing centres in FY2020 with a specific focus on affordable housing mostly in tier II and II locations.
The company started direct marketing executives channel for loan sourcing in FY2019, which contributed business of Rs 700 crore. The company would further strengthen cost effective direct marketing executives channel in FY2020.
The company has witnessed consistent decline in pre-payment rate, which has declined to three year low.
The company has exhibited improvement in Net Interest Margins (NIM) to 2.54% for Q4 FY19 from 2.44% for Q4FY18. NIM has improved to 2.36% in FY2019 from 2.25% in FY 2018.
The company witnessed 4 bps rise in cost of funds to 8.53% in Q4FY2019, which has been passed on to the customers. The company has raised its lending rate by 10 bps in Q4FY2019 and 70 bps in FY2019. The lending rates were increased by 20 bps each in April 2018, August 2018, October 2018 and by 10 bps in January 2019.
The yield on loans stood at 10.3-10.4% in Q4FY2019. The company aims to improve margins by 5-10 bps in FY2020.
The company has witnessed increase in Gross stage 3 assets including developer loans to 1.58% end March 2019 from 1.25% end December 2018, mainly on account of transition of Gross Stage 2 assets to Gross stage 3 assets. The Gross Stage 2 assets have declined 56 bps, while Gross Stage 1 assets improved by 23 bps in Q4FY2019.
The company is maintaining strong focus on asset quality, while expects most of the increase in NPAs to upgrade by September 2019 and improve asset quality.
The NPA coverage ratio of the company was lower on account of near term recoverability of NPAs.
The company does not have any exposure to account under NCLT.

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