LIC Housing Finance’s net profit fell 37% year-on-year in the December quarter due to a rise in provisions. The lender posted a bottom-line of Rs 480.3 crore in October-December, up 57.5% on quarter.
The bank’s provisions rose to Rs 7,285 crore in the December quarter from Rs 355 crore a year ago. The housing financier’s stage 3 exposure fell to 4.75% as on December 31 from 5.04% a year ago.
“We are expecting the gross non-performing asset to less than 4% by the end of January-March. Good recovery is taking place across ticket sizes. The trend is improving in the retail segment and project finance,” managing director and chief executive Y Viswanatha Gowd told Financial Express in an interaction.
The provision coverage ratio rose to 51% as on December 31 from 44% a year ago.
“We would like to improve our provisioning coverage ratio as a part of our prudential exercise and our conscious effort in this direction. That will give us some comfort,” he said.
Cost of funds rose by 71 basis points y-o-y to 7.4% in the December quarter. The housing financier’s bottom-line was also aided by a rise in its outstanding loan portfolio. Outstanding loan portfolio rose 10% y-o-y to Rs 2.9 trillion as on December 31.
Net interest income rose 10% y-o-y to Rs 1,606 crore in the quarter under review. Net interest margin remained at 2.42% in the December quarter. Revenue from operations rose 16% y-o-y to Rs 5,871 crore.
But, the company’s total disbursements fell Rs 16,100 crore in October-December from Rs 17,770 crore a year ago. Out of this, disbursement in the Individual Home Loan segment fell to Rs. 13,580 crore from Rs 15,341 crore a year ago.
Project loans rose 46% y-o-y to Rs 427 crore in the quarter under review. Individual home loans account for more than 84%, and developer finance comprises 4% of the overall portfolio.
The demand for home loans has waned in recent months with bankers linking this dip to high interest rates. But, Gowd is positive on the segment’s prospects.
“We saw some correction in home loans in October and November. From December onwards, we are witnessing a robust growth. We are very positive on the affordable housing segment. The recent budget has also put more disposable income in the hands of people. This would encourage people to buy a new house,” Gowd said.
“We are highly positive on developer finance portfolio as we are seeing better traction than previous years. It will pick up going ahead. I am positive on this segment,” he added.