The slow loan book growth is the only lacuna in LIC Housing Finance, said Tribhuwan Adhikari, managing director and CEO of the firm. Adhikari added that the firm will look to achieve double-digit loan book growth in the coming financial year.
What Happened: Adhikari was addressing a media conference after the lender posted results for the quarter that ended in March 2024.
The company's total loan portfolio rose 4% to ₹2.86 lakh crore in the quarter. Adhikari said that while the firm needs growth in the loan portfolio, he also needs to think about the margins.
"If I'm to sustain my profits, I need margins. It’s a trade-off that we will have to examine case by case and we cannot go down too low. There is a disadvantage if I go to a big builder doing a huge project with 400, 500 flats. The other option is to finance him at a low cost of interest, but I would get a lot of individual housing loans from the project which will give me returns. So it’s a case-to-case decision that we have to make", Adhikari said.
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The company had disbursed close to ₹60,000 crore in FY24 and is targeting a total disbursement of ₹75,000 crore for the next year, which would be a 13% growth, Adhikari added.
The company also saw a contraction in project loans. Project loans fell 32% to ₹8036 crore in the quarter. The management said the reason for the drop is big borrowers moving away from the company due to interest rates. "Some of the big borrowers moved away from us. Partly to do with interest rates. They wanted a certain rate of interest which we felt was not in tune with what we wanted. Maybe our competitors were offering better rates of interest. So it was a conscious call we took because it was a call between book growth and margins", Adhikari said.
LIC Housing Finance in their results for the March quarter posted an 8% decline in net profit to ₹1,090.82 crore. The lender's net profit was at ₹1,180.28 crore in the previous year. The company's net interest income rose 12% to ₹2,237.60 crore while net interest margin (NIM) surged to 3.15% in the quarter from 2.93% in the previous year.
Price Action: Shares of LIC Housing Finance closed 3.93% higher at ₹655.80 on Thursday.
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