LIC Housing to focus on LAP, intensify its recovery efforts

LIC Housing Finance (LIC HF) will expand its branches in new geographies, increase focus on high-yielding loan against property (LAP) and intensify recovery efforts as it consolidates its position as the largest housing finance company after the merger of larger rival Housing Development Finance Corp with its banking arm.

LIC HF CEO Y Viswanatha Gowd said the company expects to improve its net interest margin (NIM) and increase loan disbursements this fiscal after tepid growth in the last two quarters.

“We want to consolidate our position as the largest housing finance company and are looking to add 25 to 30 branches and increase our presence in smaller towns in states such as Maharashtra and Madya Pradesh, where home loan penetration is very low. We expect our loan book to grow by 10% to 12% in the current fiscal year compared to 9.50% growth reported in the last fiscal,” Gowd said.

In fiscal 2023, disbursements to individuals fell 0.37% to ₹53,459 crore. Disbursements for project loans doubled to ₹2,697 crore from ₹1,312 crore in the previous fiscal.

LIC HF’s net profit increased just 5.5% in the quarter that ended March 2023 despite a 22% growth in net interest income due to higher provisions as loans due past 30 days rose sharply. Loans due past 30 days but less than 60 days rose to 5.3% of the book from 3.9% in December 2022.

EMIs Climb
Gowd attributed the spike to higher bounce rates in some direct debit mandates because EMIs had increased sharply in the last year.

“We have now gone back to customers and retaken the mandates or extended their tenures in some cases. This year asset quality will be better and NPA ratios will come down. We expect a 20% to 30% reduction in NPAs,” Gowd said.