LIC Housing Finance will focus on the affordable housing segment in a bid to accelerate the loan growth and improve margins, managing director and chief executive officer Tribhuwan Adhikari said.
At a virtual media meet on Monday, Adhikari said the lender has not been very aggressive so far in the affordable segment. It has largely catered to the salaried customer class with a high CIBIL score. But, now it sees a lot of promise in the affordable segment. Typically, home loans of up to Rs 50 lakh are categorised as credit for affordable housing.
“Currently, affordable housing mix is 8-10% of the portfolio. Two years down the line, it could definitely be at least 20-25%,” he said. Following Housing Development Finance Corporation’s exit, LIC Housing Finance is the largest housing financier in the country.
The company’s outstanding loan portfolio grew 5% year-to-year to Rs 2.8 trillion as on December 31. It has attributed the slower growth to a change in leadership and a major technology upgrade.
“Right at the beginning of the financial year, we went in for a major technology upgrade. We conducted a major overhaul of our organizational structure. Then in August, there was a change in leadership when I came,” Adhikari, who had taken over from Viswanatha Gowd as the company’s top boss, said.
The company’s project finance disbursements have taken a hit as two large customers opted to move to peers. “It was a call on interest rates. There is a huge interest rate war going on and some of my peers are offering project loans at 8.75%, which we are not comfortable with,” he said.
With a bad loan ratio of 34%, LIC Housing will remain cautious in the project finance segment, and is focusing on improving recoveries. “Yes, we will continue to be cautious. Maybe next fiscal, we will take a call on whether we need to go all out or hold the reins,” he said.
The company’s shift to a new lending platform weighed on the performance as it took nearly four months to stabilise. But, Adhikari contends these challenges are behind the company now, and that the loan growth should be much better in the March quarter.