LIC HFL Q3 Results: Net profit plunges 45% YoY to Rs 480.30 crore

Pure-play mortgage lender on Monday reported a massive 37 per cent on-year plunge in net profit to Rs 480.30 crore in the December quarter as the company made additional provisions for expected credit loss, despite improvement in asset quality. The subsidiary has made additional prudential provisions of Rs 7,285.09 crore during the quarter, taking its coverage rate to 51 per cent against Rs 5,715.76 crore in December 2021 and Rs 6,522 crore in September 2022.

In the year-ago quarter, its provision coverage ratio stood at a little over 44 per cent, Y Viswanatha Gowd, the managing director and chief executive of the company said.

The stage 3 exposure at default or gross NPAs declined to 4.75 per cent from 5.04 per cent in December 2021 and from 4.90 per cent in September 2022 and the net NPAs too declined to 2.4 per cent from 3.2 per cent.

Explaining the reason for the 16 per cent spike in revenue to Rs 5,871 crore and the resultant 10 per cent jump in net interest income to Rs 1,606 crore, Gowd told PTI that Rs 1,569.33 crore increase in absolute provisions was due to prudential provisioning as we wanted to increase the coverage ratio.

In fact, fresh slippages were less than the recovery which stood at Rs 100 crore for the reporting quarter and the nine months recovery stands at Rs 1,400 crore.

He also guided towards better days both on asset quality as well as recovery and asserted that the higher provisioning is not due to fresh slippages but only a prudential step.

The bottom-line was also hit due to the flat net interest margin which stood at 2.42 per cent which was the same ratio in the year ago period and also a 71 bps increase in the cost of funds, which rose to 7.4 per cent from 6.69 per cent a year ago. On the 16 per cent increase in revenue despite a fall in overall disbursements, which declined to Rs 16,100 crore as against Rs 17,770 crore, he said this was boosted by a 115 bps increase in interest rate pass-on effected in the previous quarter after the regulator increased the policy rate.

Rising interest rates and inflationary trends continue to put upward pressure on home prices in many regions, leading to some dip in loan origination during the quarter barring for December and the upward trend continues into January.

Of the total disbursement, the retail/individual home loan segment stood at Rs 13,580 crore as against Rs 15,341 crore due to poor sales in October and November but recovered in December. But project loan sales zoomed 46 per cent to Rs 427 crore from Rs 293 crore.

The retail book constitutes 83 percent of the asset, which was 80 percent in the year-ago period and project loan constitutes 4.5 percent.

The outstanding loan portfolio increased 10 per cent to Rs 2,68,444 crore by December of this the individual home loan portfolio stood at Rs 2,23,064 crore up 14 percent on-year and project loan book stood at Rs 1,08,57 crore as against Rs 14,091 crore.