LIC Housing Finance's FY19 net profit grows 21 pct to Rs 2,431 crore

Mortgage lender LIC Housing Finance Saturday posted a 17 per cent surge in net profit at Rs 693.58 crore on a jump in core income but reported an increase in asset quality stress from developers who have taken project loans in March quarter. The city-headquartered company, an arm of life insurance behemoth LIC, had posted a post-tax net profit of Rs 594.34 crore in the year-ago period. Its FY19 net profit, on the whole, grew 21 per cent to Rs 2,431 crore.

Its core net interest income grew 21 per cent during the reporting quarter to Rs 1,201 crore on a 16 per cent portfolio growth and 0.10 per cent jump in net interest margins to 2.54 per cent. The company's managing director and chief executive Vinay Sah said the expansion in NIMs was possible because of a cumulative 0.70 per cent hike in the prime lending rate during the course of the fiscal.

During the reporting quarter, its cost of funds moved up 0.07 per cent, but it was able to hike the PLR by 0.10 per cent, he said. It was an extraordinary year for non-bank lenders and home financiers in specific because of liquidity issues, he said, adding that while the situation has improved, the companies are yet to fully come out of it. Sah said his company has lowered its reliance on commercial paper borrowings and raised Rs 35,000 crore from the non-convertible debentures route. It is targeting 15 per cent growth in assets during FY20, and may raise up to Rs 60,000 crore from the NCD route if the rates are favorable, he said.

On asset quality, the lender said the gross non performing assets from the project loans segment have doubled to 1.53 per cent against 0.78 per cent in the year ago period. Sah attributed the same to stressed accounts slipping into NPAs in the absence of any improvement in the conditions, and added that the project loan disbursements have gone down to Rs 2,031 crore in March quarter as against 2,262 crore. Its provisioning increased to Rs 105 crore from the year-ago period's Rs 70 crore because of the same. In five years, the company will be exclusively originating all the mortgage loans distributed by sister concern IDBI Bank, which has been taken over by LIC, Sah said.

He explained that as per a memorandum of understanding signed between LIC and IDBI Bank, the lender will be exclusively selling loans of LICHFL and not distribute competitiors' products. Sah said the average ticket size has moved up 10 per cent to Rs 22 lakh during the fiscal, and added that a bulk of the demand is coming from non-metro areas. Of the various zones it operates in, Chennai is weak both from a residential as well as project loans segments, while the north market is witnessing troubles on the project loans, he said. The company board has recommended a dividend of Rs 7.60 per share at its meeting Saturday.