HFCs may face slow­down in H2 FY19

HT Estates - - FRONT PAGE - Shayan Ghosh let­[email protected]­dus­tan­times.com

MUM­BAI: Hous­ing­fi­nance com­pa­nies (HFCs) may see slow­ing credit growthinthesec­ond­hal­fof 2018-19 be­cause­of­fac­tors suchas tight liq­uid­ity and­in­tensec­om­pe­ti­tion, rat­ing agency Icra said on Thurs­day.

The sub­dued credit port­fo­lio growth, Icra said, is in con­trast to the favourable pe­riod wit­nessed inthesec­ond­hal­fofthe­last­fi­nan­cial year.

“The home loan port­fo­lio of hous­ing fi­nance com­pa­nies has con­tin­ued its growth tra­jec­tory and has grown at a faster pace of 18% y-o-ytill 30Septem­ber2018as com­pared to the home loan book of banks, which grew at 16% y-o-y,” Icra said.

The non-hous­ing loan port­fo­lio of HFCs grew at 29% y-o-y at the end of Q2 FY19.

Av­er­age loan ticket sizes acrossHFCswasaround₹25lakh and more than 80% of the home loan port­fo­lio was in the ₹10 lakh-1 crore bracket, which has re­ported bet­ter as­set qual­ity per­for­mance­com­pared­tolowerand higher ticket sizes.

Gross non-per­form­ing as­sets (NPAs) ra­tio as on 30 Septem­ber 2018 was 1.3% (slightly higher than 1.1% as on 31 March 2018), but tight liq­uid­ity and­slow­down in growth could im­pact the as­set qual­ity in the non-hous­ing loan seg­ment, Icra cau­tioned.

“Withinthe­hous­in­gloansseg­ment for HFCs, the share of the self- em­ployed seg­ment has in­creasedto29% asonSeptem­ber 2018.

Though some of the larger HFCs­can­com­pete­with­banksin the salaried home loan seg­ment, most of the HFCs tar­get self-em­ployed­cus­tom­erseg­mentsorthe af­ford­able hous­ing seg­ment to op­ti­mize their yields,” it said.

While the self-em­ployed seg­ment of­fers good growth po­ten­tial, the re­port said, as­set qual­ity in this seg­ment is in­fe­rior with gross NPA of 1.5% as on Q2 FY19 (1.1% ason31March2018) as­com­pared­with­the­salaried­seg­ment’s gross NPA of 0.5% as on Q2 FY19 (0.4% as on 31 March 2018).

“In our opin­ion, gross NPAs for HFCs in the home loan seg­ment could in­crease to around 1.1-1.3% over the medium term from the cur­rent level of 1%. More­over, higher gross NPA ra­tio on the non-hous­ing loan seg­ment­couldlead­toin­crease in gross NPAs for HFCs to around 1.4-1.8% over the medi­umterm,” said Supreeta Ni­j­jar, vice-pres­i­dent and sec­tor head, fi­nan­cial sec­tor rat­ings, Icra.

The abil­ity of HFCs to im­ple­ment­time­ly­col­lec­tio­nan­drecov­ery ef­forts in re­spect of the delin­quent loans—re­pos­sess­ing the prop­erty wher­ever nec­es­sary, and sell­ing the same in a timely man­ner—will be key, ac­cord­ing to Ni­j­jar .

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.