LIC Housing Q3 net up 43% aided by provision write back

Aided by an one-off item of provisioning write-back, India's second largest mortgage lender LIC Housing Finance 's (LICHF) third quarter (Oct-Dec) net profit rose more than 43% year-on-year to Rs 306 crore. However, the net interest income (NII) or the difference between interests earned and paid out, fell 5% y-o-y to Rs 326 crore on slower loan disbursements to developers.

The company was making provisions on standard assets and non-performing assets in excess over National Housing Bank (NHB) norms. With revised NHB prudential norms, the company has reversed the excess provisions of around Rs 80 crore during the quarter, according to a release issued by LICHF.

The outstanding loan portfolio rose 27% y-o-y to Rs 58,707 crore. In the three months period ending December, the company reduced its credit exposure to real estate developers. Disbursements in the developer loan segment were Rs 154 crore compared with Rs 411 crore a year back.

"So far, we have provided around Rs 700 crore loans on this account. We aim to disburse Rs 3,000 crore developers loan in FY12. That will help align our net interest margin. We will retain our NIM in the range of 2.7-3% in FY12," V K Sharma, chief executive of LICHF told Moneycontrol.com.

However, the company expanded its book for individual loans. It disbursed around Rs 4,570 crore loans to home buyers as against Rs 4,215 crore, a rise of more than 8%.

The net interest margin (NIM) contracted from 2.45% to 2.27% sequentially. The gross non-performing asset ratio almost remained flat at 0.63% quarter-on-quarter suggesting that the company has maintained its asset quality.

NHB is the regulator for all housing finance companies. A loan account is termed non-performing asset when a borrower stops equated monthly installments for 90 days.

Standard asset means the asset in respect of which, no default in repayment of principal or payment of interest is perceived and which does not disclose any problem nor carry more than normal risk attached to the business.

Meanwhile, LICHF is looking to raise fresh funds to expand its business. The Life Insurance Corporation of India or LIC, the parent body of LICHF, according to Sharma, has given in-principal approval in this regard.

"The amount of fund raising is yet to be finalised. We will also decide the routue to mop up funds," he added.

Source: www.moneycontrol.com

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