Capitaline

Analyst Meet / AGM 31-Jan-20

Conference Call

LIC Housing Finance

Witnesses 35 bps increase in stage 3 assets to 2.73% in Q3FY2020

LIC Housing Finance conducted on conference call on 31 January 2020 to discuss its financial results for the quarter ended December 2019. Siddhartha Mohanty, MD & CEO of the company addressed the call:
Highlights:

The company has registered a good growth in the home loan segment especially in the affordable housing segment. The company expects the momentum to continue in the Q4 and hope to end the fiscal year on a positive note.
The company is strongly focusing on asset quality and is bringing down loan defaults, besides cost improvement and better market presence.
The disbursements rose to Rs 13177 crore in Q3FY2020 from Rs 12778 crore in Q3FY2019, driven by strong growth in disbursement in individual home loan segment of 16% to Rs 10655 crore from Rs 9170 crore. However, the project loans disbursements have dipped 25% to Rs 931 crore and other retail by 33% to Rs 1591 crore in Q3FY2020.
The individual loan portfolio increased 13% to Rs 192459 crore, while project loan portfolio rose at slower pace of 21% to Rs 13233 crore end December 2019 over December 2018. Total outstanding portfolio grew at 13% from Rs 181553 crore to Rs 205692 crore end December 2019.
The company has posted healthy 18% growth in the net interest income to Rs 1228 crore. Net interest margin improved to 2.42% in Q3FY2020 from 2.33% Q3FY2019.
The company continues strong focus on PMAY with affordable housing disbursements at 16000 accounts worth of Rs 3400 crore, registering a growth 88% in volume and 106% in value of overall disbursements in Q3FY2020. Under PMAY, the company has disbursed to 40800 accounts amounting to Rs 8400 crore in 9MFY2019. The company expects to continue strong growth in PMAY segment, which is important engine of growth.
The company remained selective in the project loan with decline in disbursements to Rs 931 crore in Q3FY2020 from Rs 1238 crore in Q3FY2019.
The company has introduced 2 new products one for the under construction home segment offering the option to borrower to pay interest only till the date of occupation or 48 months and other for ready to move home offering the benefit of EMI waivers up to six months. Both the products have received well.
The company has witnessed 35 bps increase in stage 3 assets to 2.73% in Q3FY2020, while its encouraging that there was no deterioration in project loan NPAs in Q3FY2020 which has marginally declined to Rs 2000 crore end December 2019.
The pure individual housing loan GNPA stands at 1.35%, LAP 3.0% and project loans at 14.05% end December 2019.
The GNPA of the company stood at Rs 5686 end December 2019, of which projects loan is Rs 2000 crore and balance is retail NPA.
The fresh slippages of loans stood at Rs 800 crore, of which Rs 200-250 came from individual housing segment and Rs 200-250 crore from non-housing segment.
Further, the company has classified Rs 180 crore of retail loans of single borrowers relating to multiple accounts as NPAs on account of one account being NPA.
The company has accelerated provisions to Rs 390 crore in Q3FY2020, with overall provisions rising to Rs 2500 crore and PCR improving to 45% end December 2019.
With some remission in developer loan defaults, the company expects credit cost to moderate ahead. The company has taken conservative approach on asset quality recognition in FY2020, while expects stable asset quality in FY2021.
The company has witnessed sharp 27 bps decline in cost of funds in 9MFY2020. Incremental cost of funds has dipped by 69 bps to 7.87% in Q3FY2020 from 8.56% in Q3FY2019.
As per the company, about 25-27% of the developer loans are under moratorium end December 2019.
The company has overall 260 accounts under developer loan segment. Among the NPA accounts, the company has referred 5 cases to NCLT, of which 2 cases have received NCLAT order to settle by March 2020. Further, the company has referred eligible 14 account amounting to Rs 1100 crore to AIF.
The company is holding provision coverage ratio of 51.17% on developer loans.
The top 10 developer accounts has an exposure of 14-15%, of this 15-16% is NPA.
The exposure under LRD stands at Rs 8000 crore which is retail plus corporate.
Individual luxury home loans share stands at 2-3% end December 2019.

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