LIC Housing Finance (LIC HF) is planning to expand its branch network and consolidate its position as the largest housing finance company following the merger of its competitor. The company will concentrate on providing high-yielding loans against property (LAP) and intensify efforts to recover outstanding debts. LIC HF aims to boost loan disbursements and improve net interest margins by establishing new branches in smaller towns with low home loan penetration, primarily in Maharashtra and Madhya Pradesh.
LIC Housing Finance (LIC HF) is determined to expand its branch network in new regions as part of its strategy to consolidate its position as the largest housing finance company in the wake of the merger between its larger competitor, Housing Development Finance Corp, and its banking arm.
The company will particularly focus on offering high-yielding loans against property (LAP) and intensify its efforts in recovering outstanding debts. CEO Y Viswanatha Gowd emphasized the goal of boosting loan disbursements and improving the net interest margin (NIM) for the current fiscal year, following significant growth in the previous two quarters.
To achieve this, LIC HF plans to establish 25 to 30 branches in smaller towns with low home loan penetration, primarily in states like Maharashtra and Madhya Pradesh.
Despite a 22% increase in net interest revenue, LIC HF's net profit in the quarter ending March 2023 rose by a modest 5.5% due to higher provisions made to address the mounting loans outstanding for over 30 days. The proportion of loans with a past-due balance ranging from 30 to 60 days surged from 3.9% in December 2022 to 5.3%.
To rectify this, the company has taken proactive measures, such as revisiting agreements with clients and extending loan tenures when necessary. Gowd expressed confidence in improving the asset quality and reducing the non-performing asset (NPA) ratios, projecting a substantial drop of 20% to 30% in NPAs.
In summary, LIC HF is set to expand its presence in untapped markets by increasing its branch count, with a specific focus on offering LAPs and strengthening recovery efforts. The company aims to enhance loan disbursements and improve its net interest margin. Despite facing challenges related to increasing outstanding debts, LIC HF remains optimistic about improving asset quality and reducing NPA ratios in the coming year.
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