The Hindu Business Line : LIC Housing Fin eyes 25% credit growth

“The growth really began for us in the fourth quarter of the last fiscal when we grew at 70 per cent. In the first quarter of this fiscal, we grew at 16 per cent but we hope to increase that to 22-25 per cent this year,” said Mr S.K. Mitter, Director and Chief Executive.

He, however, expects the industry’s growth to slow down to 23-24 per cent this year, from 30-35 per cent last year. The slowdown has been the effect of a 150 basis point rise in interest rates in the past 15 months.

The company recently renewed its accent on growth. Until last year, the company had been growing moderately as the focus was on internal restructuring.

“We are a consistent player and do want aggressive growth which will be linked to delinquencies. The aim is to preserve our asset quality,” Mr Mitter said.

Festival offer

Like other home loan providers, LIC HFL has also been offering a special festival rate of 10.5-10.75 per cent on home loans to boost growth.

As of August 31, LIC HFL has seen a 50 per cent jump in sanctions at Rs 2,807 crore and 31 per cent rise in disbursements at Rs 2,104 crore. The outstanding mortgage portfolio stood at Rs 18,200 crore.

To sustain its growth needs, LIC HFL hopes to raise Rs 6,200 crore of capital through bond issuance, Mr Mitter said.

NPAs edge up

The company has, however, seen a rise in its non-performing assets. The gross NPA is currently at 3.56 per cent, higher than 2.63 per cent at the end of March.

According to the CEO, borrowers may be putting off the payment of equal monthly instalments earlier in the year.

But they are likely to pay up by the end of the year, to claim tax relief.

“We hope to lower gross NPA to 2 per cent by the end of the year,” he said.

The company’s strategy for achieving higher growth is to tap high net worth individuals.

This is evident in the jump in the average loan size of the company over the past two years. In 2005, the ticket size was Rs 5 lakh, and it has now gone up to Rs 9 lakh.

IT effect

Mr Mitter said that around 60 per cent of the business comes from the cities (Bangalore, Delhi, National Capital Region, Hyderabad and Chennai) where the IT industry has expanded.

On real estate prices, Mr Mitter believes that there has been a marginal cooling off, but supply continues to be less than demand.

“In the case of retail, demand will continue to outstrip supply and the market has enough depth for the next 10 years,” he says.