Sundaram BNP Paribas net up 11%

Written by fe Bureau | Chennai | Updated: Oct 22 2014, 08:31am hrs
Sundaram BNP Paribas Home Finance has reported a net profit of R36.11 crore for the second quarter, an 11% increase from the R32.62 crore earned in the year-ago period.

The disbursements during Q2 were down to R537 crore during the same period; in Q2 of last fiscal, disbursements were R685 crore. Srinivas Acharya, MD of Sundaram Home Finance, attributed the drop in disbursals to the sluggish real-estate market.

Sundaram BNP Paribas Home Finance, a joint venture between Sundaram Finance and BNP Paribas, is looking at acquiring loan portfolios of smaller housing finance companies that focus on the affordable housing segment.

Speaking after releasing the companys second-quarter earnings here on Tuesday, Acharya said, We are in talks with smaller HFCs to buy their portfolio in the affordable housing space wherein they originate the loans and we will then take over. We are in talks with one company and would be taking over a loan size of around R11 crore.

"We believe there is potential to do R600 crore to R700 crore of portfolio deals for a full year. Recoveries are excellent in this space, he said.

The company prefers to acquire such assets instead of directly lending to the target section the economically weaker one as it needs expertise in due diligence and credit evaluation. The company was of the view that it requires a lot of manpower. These loan accounts, typically around R7 lakh on an average, also give better yields, he said.

Sundaram Home Finance has done business worth R20 crore in the three months since it started. Traction is good. The company could do (business worth) R50 crore before the end of the year, he said.

We are looking at 10% growth in overall disbursements this year (FY15) given that we are hoping for a revival in Q4. We have opened new offices in Bellary, Gulbarga, Hyderabad and Jaipur. We will be looking at Gujarat and Rajasthan for further expansion outside the South (India) market, he said. The company is looking to raise around R1,500 crore before the end of the year as part of its fundraising plans through a mix of term borrowings, sub-ordinate debt, commercial paper, deposits and NHB refinance.