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Expect a 15% growth in housing loan disbursements

The yields have gone up as compared to last year and this has also translated into a good growth in our net interest income also, said Vinay Shah, MD & CEO, LIC HousingNSE 1.15 %, in an interview with ET Now.


Edited excerpts:

Given the heightened liquidity concerns over the past couple of months, how do you assess the entire situation vis-à-vis what we saw in October?
The liquidity position as compared to October-November has eased quite a lot. We are finding that it has eased both in the short tenure as well as longer tenures funds. But in October also, getting money was not a problem for our company as being a AAA rated company we are getting money though at slightly higher rates. Now it has eased substantially. Every year during the second fortnight of March, there is some tightening because of advance tax payments and other things but that is an annual thing. Now the position is fairly good.
Calculated spreads have also declined. What led to this decline and especially the decline that one has seen in the yields for LIC Housing Finance?

On the contrary our spreads have been stable. Last year starting April onwards till the 1st of January, we increased our lending rates by 70 bps and this has been transferred to whole of our back book. About 80-85% of the book is on floating basis. We have had similar spreads and we did not have much of decline as far as the spreads go.
Can you just tell us what the outlook is on your borrowing mix change? Given the high proportion of NCDs, how do you see borrowing costs in your spreads shaping up?

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Borrowing cost have gone up from last year levels. We have to see if going ahead, the rates remain stable. There has also been some benefit from the RBI repo rate decrease also. If the rates remain stable, the margins would be at the same level or they may improve also. The yields have gone up as compared to last year and this has also translated into a good growth in our net interest income also.

There has also been sharp increase in the builder loan growth despite high delinquencies. What is the rationale for this high growth given the high stress scenario in real estate?

During current year, builder growth looks very high. The main reason is that we are operating at a very small base and out of about 246 odd accounts which we are servicing, four or five accounts constitute the major chunk of the delinquent NPAs.

Secondly, the full book of our builder loan portfolio is only about 6%. In the NPAs also I see resolution coming in most of them. It may take some time in between but we are very sure that the resolutions will come. The comforting fact is that there is the underlying security that we have. Recently in Q2, we had made one recovery wherein we recovered the full principal and not only that the major part of the interest.
There has been some signs of struggling growth in home loans. When can we expect a pickup?

The real estate sector in the last two-three years has faced many challenges starting from demonetisation, RERA, GST followed by liquidity crunch in Q3. But of late, things are picking up. We expect better growth throughout the country because of two reasons – one is the lowering of the GST rates on under construction projects and the number two is the continuity of housing subsidy which the government has now extended till March 2020.

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I expect a good pickup there. The market sentiment is improving and going ahead, I would still see a growth rate of around 15% in housing loan disbursements.

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