Capitaline

Analyst Meet / AGM 22-Oct-19

Conference Call

LIC Housing Finance

Expects stable margins with upward bias

LIC Housing Finance conducted on conference call on 22 October 2019 to discuss its financial results for the quarter ended September 2019. Siddhartha Mohanty, MD & CEO of the company addressed the call:
Highlights:

The operating environment remained challenging in Q2FY2020, while the company has still registered healthy disbursements of Rs 12173 crore in Q2FY2020.
Disbursements in the individual home loan segment rose 4% to Rs 11728 crore against Rs 11324 crore, whereas disbursements in project loans dipped 85% to Rs 445 crore as against Rs 2970 crore in Q2FY2019 due to challenging environment.
The disbursements in LAP segment also dipped to Rs 1592 crore in Q2FY2020 from around Rs 2500 crore in Q2FY2019, causing slow growth in the individual home loan segment.
The loan portfolio of the company increased 14% to Rs 203036 crore end September 2019. The individual loan portfolio increased 14% to Rs 189351 crore, within that home loan portfolio registered a growth of 13% to Rs 164000 crore.
Developer loan portfolio moved up 25% to Rs 13685 crore end September 2019.
The company proposes to focus on maintaining existing loan growth going forward.
The company continues strong focus on PMAY with affordable housing disbursements at 25000 accounts worth of Rs 5000 crore amounting to 26% of volume and 24% of value of overall disbursements in H1FY2020. This has generated subsidy of Rs 400 crore for customers under PMAY in H1FY2019.
The company has witnessed increase in GNPA ratio (stage 3 asset ratio) to 2.38% end September 2019 from 1.98% end June 2019 and 1.27% end September 2018.
The NPA in the developer's loan book jumped to 14.8% end September 2019 from 11% end June 2019. The NPAs for pure home loan book stood at 1.05% and non-home loan retail book at 2.36% end September 2019. Overall retail book NPAs increased to 1.52% end September 2019 from 1.25% end June 2019 and 0.81% end September 2018.
The company has formed a task force to track NPAs and monitor loan book. As per the company, most of the NPAs in the developer segment are completed projects or nearing completion, while holds security value higher than exposure.
The company has negligible NPA in salaried segment. In the developer book NPAs are spread across all geographies in major 7 cities.
About 35-36% of builder book is under moratorium of 12-18 months.
The collection in the NPA book stood at Rs 40 crore, including Rs 28 crore of principal repayment and Rs 12 crore of interest payment in Q2FY2020.
Stage 2 assets book of the company has remained nearly stable at 4.74% end September 2019, which includes Rs 400 crore of project loans.
The company has witnessed 20 bps decline in incremental cost of funds to 8.04% in Q2FY2020 from 8.24% in Q1FY2020, while expects further decline in cost of funds ahead.
Net Interest margins stood at 2.42% in Q2FY2020 as against 2.41% in Q2FY2019. The company expects to maintain spread and margins at stable level with upward bias.
As per the company, during next six months bonds worth Rs 17500 crore with the coupon rate of 8.3% are scheduled to mature and would get repriced at lower coupon.
Bank would remain measure source of borrowing, while bank reducing MCLR would help to reduce cost of borrowings.
The ALM position of the company is within limits, while unutilized line of credit stands at Rs 10-15000 crore.
CRAR of the company stood at 14%+ with Tier I at 12.3-12.5% end September 2019.
An incremental yield on loans stood at 9.3% with pure home loans at 8.84%, ex-home retail 10.5% and 12.7% in Q2FY2020.
The tax rate for Q2FY2020 was lower due to extra provisions in Q1FY2020. The company expects tax rate to stabilize at 21-22% plus surcharge. The company has fully absorbed DTA impact.

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