Motilal Oswal Housing Finance Ltd (MOHFL) expects to grow its balance sheet to at least ₹10,000 crore in the next three-four years through organic growth and portfolio acquisitions.
The balance sheet size of the affordable housing finance company, which is a subsidiary of Motilal Oswal Financial Services Ltd, stood at ₹3,576 crore, including loans aggregating ₹3,360 crore, as of September end 2021.
Arvind Hali, MD & CEO, MOHFL, said, “We are looking at 30-40 per cent year-on-year (y-o-y) growth. We expect that over the next three-four years, we should have a balance sheet size of at least ₹10,000 crore.”
Hali underscored that MOHFL’s pedigree, strong capital (equity share capital of about ₹600 crore and net worth of almost ₹1,000 crore), distribution network (104 branches spread across 11 States), people, processes and technology will help it achieve the targeted top-line.
“We are fairly well capitalised and our leverage (total borrowings/net worth) is only 2.5 to 3 times. So, we have a huge headroom to leverage on our own balance sheet,” Hali said.
On the loan portfolio declining 7 per cent y-o-y to ₹3,360 crore as at September-end 2021, the MOHFL chief observed that there were repayments to some extent on account of the credit-linked subsidy scheme (CLSS) and business was subdued in the first quarter of FY22 due to the second wave of Covid-19.
“In April-May 2021, business was virtually at a standstill. But from June onwards, we have seen improvement…We have, in fact, started exceeding the pre-Covid numbers,” Hali said.
MOHFL (formerly known as Aspire Home Finance Corporation Ltd) is focussed on lending to the low-income group/ LIG (annual income between ₹3,00,001 and ₹6 lakh) and its average home loan size is in the ₹9-10 lakh range.
“We focus on customers who are self-employed, those who draw salary in cash, among others. We have developed credit underwriting competency to cater to such customers. Large part of our business is geared towards supporting self-construction whereby the customers already own land and we fund construction of the house,” Hali said.
On the challenge of customers transferring their loan from one lender to another to get the benefit of lower interest rate, the MOHFL chief noted that this happens on both sides – MOHFL takes over other banks’ loans and they also keep taking over from it. “So, on a net-net basis, we seem to be benefiting. We are taking over more customers than we are losing them,” he said.