LIC Housing Finance, the largest housing finance company, expects to recover around Rs 400-500 crore from bad loans in the current financial year. The company will aggressively use measures such as one time settlement (OTS), and has approached asset reconstruction companies to boost the recovery process.
“We are in talks with some big delinquent borrowers, especially on project loans side. They have evinced interest in OTS, which we are following up,” said Tribhuwan Adhikari, MD and CEO, in an earnings call on Thursday. “We expect around Rs 400-500 crore of sticky and lumpy loans to be resolved in the coming quarters.”
LIC Housing Finance expects its net interest margin (NIM) to moderate in the coming quarter. The company was able to expand the NIM in the past quarters and the margins reached a peak of 3.41%, much above the guidance, in the first quarter of the current financial year. In the second quarter, the NIM stood at 3.04%, against 1.78% in the year-ago period.
The management feels the NIM of more than 3% is unsustainable and expects it to moderate. “Our guidance (for NIM) was in the range of 2.5-2.6%. We still maintain that guidance and should be able to be in the range of 2.6-2.8% in the current financial year,” said Adhikari.
The company is bullish about loan growth and expects disbursements to increase. Its sanction-to-disbursement ratio, which denotes the amount of loan disbursed against sanctioned loans, is currently around 80%, and the management expects this ratio to increase in coming quarters. The company has already started witnessing signs of growing loan disbursements.
“Loan disbursements are growing month-on-month. Total disbursements increased from Rs 4,813 crore in September to around Rs 5,100 crore in October,” said Adhikari.
Loan disbursements were around Rs 4,500 crore in August, according to company officials.