Apart from metros, LIC Housing Finance focussing on tier II & III cities for affordable segment: MD

“Our ticket size is around Rs 26 lakh and affordable housing is driving the market even now. We are very strong in this field and across all the cities, all our regions and across all the states, there is a very good uptick,” says Y Viswanatha Gowd, MD & CEO, LIC Housing Finance

This quarter has seen a stable set of numbers coming in for LIC Housing Finance. NIIs are nearly flat, provisioning saw an uptick coming in and disbursements were up just 4%. Could you help us understand what factors have led to this Q2 performance?
For the quarter, the business disbursements are very good. We have shown more than 10% sequential growth over Q1. The disbursements were good especially in the individual retail segment – individual housing loans. In the portfolio also, year on year, there was a good growth of more than 10%. Even quarter wise, there was sequentially more than 3% growth in the overall loan book.

In Q1, the management remained positive on the individual loan segment expecting a growth of 12%. What has been the growth in this segment as well as the whole book in FY23?
Individual housing loan growth is 13-14%. Even earlier, we were indicating that for the whole year FY22-23, our guidance will be around 15% year on year. We are looking for healthy growth even in the current year.

What sort of forecast or estimate do you have for the business, for construction?
In the case of developer loans, we were very calculative and adopted a very cautious approach. Apart from metros, we are also focussing on tier II, tier III cities but only for the affordable segment. We also would like to mention that we are able to see some good signs of improvement in the builder segment and are able to recover very well in next two quarters.

NIMs have dropped sharply. Do you expect it to remain that way or can there be an uptick in the coming quarter?
NIMs will definitely improve. Even earlier also, we were guiding that there will certainly be an improvement in NIMs. In the cost of funds, if you look at what happened now, the PLR is also revised. So, what happened is that the transmission has already taken place from October 1 and that makes for a good improvement in our collections also.

Analysts believe that the slippages from the restructured book is the bigger risk. Could you give some colour on this? What are the NPA trends that you are seeing and what is the outlook on provisioning?
Both retail and developer book was earlier to the tune of more than 2%. Now it has come down. There is a good recovery happening across. Our teams are in place and although the collection efficiency has improved very well, it is around 99% now. With all these things, we are hopeful that in the next two quarters, there will be remarkable improvement in the recovery of OTR (one time restructuring) cases also.

From an industry standpoint, housing demand remains very strong despite rates going higher. How has the demand been for you, especially in the affordable phase?
There is one good thing, our ticket size is more or less around Rs 26 lakh and affordable housing is driving the market even now. We are very strong in this field and across all the cities, all our regions and across all the states, there is a very good uptick as far as affordable housing is concerned.

We are very much positive and hopeful that in the coming two quarters, whatever we have planned for, we will achieve well in advance and also there is robust growth. Though there is an increase in interest rates, digital operations are in full swing. One-third of the policy is now happening through our HOMY app only.