LIC Housing Finance Ltd
Incorporated in 1989, LIC Housing Finance Ltd (LICHFL) (NSE: LICHSGFIN) is one of the largest Housing Finance Companies in India with a key objective of providing long term finance to individuals for the purchase or construction of house/flat for residential purposes in India. LICHFL also provides finance on existing property for business/ personal needs and also gives loans to professionals for purchase/construction of Clinics/Nursing Homes/ Diagnostic Centers/ Office Space and also for purchase of equipment. The Company also provides finance to builders and developers engaged in the business of construction of houses or flats for residential purpose and to be sold by them.
The Company went public in 1994 and since then its stocks are listed and actively traded on the National Stock Exchange (NSE) and Bombay Stock Exchange Limited (BSE).
LIC HFL is amongst the pioneers in India ensuring access to housing finance for home ownership. With a strong business foundation, an extensive distribution network and proven industry expertise, LIC HFL is a respected and trusted financial services company. The company pride in having served over 25 lakhs prudent home owners.
The company has 284 marketing offices Including two abroad and More than 12000 marketing intermediaries to guide through the loan processes.
- Home Loans
- Griha Varishtha Home Loan for Pensioner
- Pradhan Mantri Awas Yojana
- Griha Suvidha
- Home Loan for NRI
- Plot Loan
Other Home Loan Products
- Home Construction Loan
- Home Extension Loan
- Home Improvement Loan
- Top Up on Home Loan
- Home Loan Balance Transfer
- Advantage Plus
Corporate / Project Loans
- Loan against Property
- Loan against securities
- Loans to Professionals
- Loan against Property for Companies
- Loan under Rental Securitization
Housing occupies a prominent position in the Indian economy as it has inter-linkages with other industries. The development of housing sector can have direct impact on employment generation, GDP growth and consumption pattern in the economy. The current estimated market size of the Real Estate industry is Rs 12 lakh crore (USD 180 bn) for FY2020. By 2030, the Indian real estate industry is expected to touch Rs 65 lakh crore (USD1 trillion), becoming the third largest globally. The residential segment in India contributes 80% of the entire real estate sector.
Key growth drivers
- Urbanisation: Rising income and employment opportunities have led to growing urbanisation and higher demand for affordable housing. Rising number of nuclear families have also aided the housing demand.
- Traction in tier II and III cities and surging demand from rural sector: The healthy growth trajectory is expected in these areas. Developers with income generating assets, healthy balance sheets and brand recognition are in a better position to increase rural penetration.
- Affordable Housing and Housing for All: Backed by several government reforms, growing population and developer realignment of product-mix, the focus has now been shifted towards affordable housing from luxury and mid segment housing. Under Pradhan Mantri Awas Yojana (PMAY) – Urban, the Government has estimated demand of 1.12 crore houses for urban poor. As on 01st January, 2020, out of 1.03 crore houses approved, 60 lakhs have been grounded for construction, of which 32 lakh houses have been completed and delivered.
- Government Policies and Initiatives: The government has introduced several measures during the last couple of years to improve the prospects of the Real-Estate sector. These includes the RERA, Benami Transactions Act, impetus for affordable housing construction, reduction of GST rates, Interest subsidy and tax saving incentives for home buyers etc.
- Increasing trend of Co-living: Developers are now diversifying and exploring new arenas providing solutions to niche segments like senior community living, coliving and co-working spaces, student housing options, healthcare facilities and other segments like townships and plotted developments.
Sales momentum in India’s top cities
The slowdown in the economy owing to the reduced consumption coupled with the liquidity crisis has had a cascading effect on the Indian housing sector in 2019. In line with the rise in new launches, 2019 also saw sales pick momentum, although at a slow pace. The housing sales of top seven cities in India stood at 2.61 lakh units in 2019, recording a yearly rise of 5%. Top seven cities presently account for around 70% of the overall residential market. Rising demand for ready properties or those nearing completion also helped the unsold stock across the cities to decline by over 4% in a year - from 6.73 lakh units in 2018 to 6.48 lakh units by the end of 2019.
The new launch supply across the top seven cities of India increased by 21% in 2019 as against 33% YoY growth in the preceding year. Mumbai Metropolitan Region (MMR) accounted for nearly 33% of the total launches across top seven cities in 2019, followed by Pune and Bengaluru which accounted for 19% and 17% respectively. Of the estimated 2.37 lakh new unit launches in 2019 in the top seven cities, nearly 40% or approximately 92,000 units have come in the affordable housing segment (units priced
Focus on Affordable and mid-segment
Affordable and mid-segment (Units Price - Affordable: Rs < 40 Lakh; Mid-end: Rs 40 Lakh - Rs 80 Lakh) sales increased by nearly 5% across the top cities in 2019 compared to the previous year. Mumbai Metropolitan Region (MMR) recorded the highest annual increase in sales at 22%. Bengaluru, Hyderabad and Kolkata recorded a decline in sales in the current year as compared to 2018, amidst restricted supply and marginally improving demand. Unsold inventory reduced across most cities in the range of 1% to 14%, barring Pune and Chennai where it increased by 6% and 4% respectively.
Growing demand for affordable housing
Home buyers have become extremely price conscious during the past few years. As a result, developers are consciously reducing the average property sizes across cities to fit their properties in the expected budget range. The demand for smaller units at prime locations is driven by increasing trend of nuclear families and working professionals/couples as they prefer to cut down on maintenance hassles and underlying costs. Developers are shrinking unit sizes which eventually helped to reduce the overall ticket prices for homes and thus fit into the affordability bracket of home buyers. Home Unit sizes drop maximum in MMR by 33% in 2019 followed by Pune.
Housing Finance Industry
The housing finance market in India is a highly competitive segment in overall credit industry. The government, both at centre and states, is a facilitator and is assisted by two regulators, Reserve Bank of India (RBI) and National Housing Bank (NHB). There are number of players in the housing finance market which includes commercial banks, both domestic and foreign. In addition, there are cooperative banks, housing finance companies (HFCs), self-help groups, micro-finance institutions and NGOs. The RBI regulates commercial banks and partially cooperative banks, which are mainly governed by the State Governments under State Cooperative Acts, while NHB regulates the housing finance companies. The others such as self-help groups, NGOs etc. are not regulated by any authority in the country. It may be mentioned that the Finance (No. 2) Act. 2019 (23 of 2019) amended the National Housing Bank Act, 1987, confirming powers of regulation of HFCs with RBI which government notified on 9th August, 2019 i.e. the date on which Part VII of Chapter VI of the Finance (No. 2) Act. 2019 has come into effect.
Rising share of retail home loans
The need of long term finance for the housing sector in India is catered by scheduled commercial banks (SCBs), financial institutions, cooperative banks, regional rural banks (RRBs), Housing finance companies (HFCs), agriculture and rural development banks, non-banking finance companies (NBFCs), micro finance institutions (MFIs) and self -help groups (SHGs). The largest contributor to housing loans by virtue of their strong branch network and customer base are SCBs, accounting for the major share of housing loan portfolio in the market followed by HFCs. Furthermore, retail home loan has been the largest asset class as it forms around 60% of the total retail advances of HFCs, NBFCs and SCBs.
HFCs provides housing finance to individuals, co-operative societies, corporate bodies and leased commercial and residential premises to support housing activities in the country. For a financing institution to be registered with the NHB as a HFC, it is mandatory to record 70% of the on-book loans as housing loans. Further, to be eligible for re-finance from the NHB, the HFC has to record 50% retail home loans on its loan book.
Fuelling liquidity in Housing Finance
The Housing Finance sector has undergone a major transformation post IL&FS crisis in September 2018, followed by subsequent liquidity issues around the HFCs & NBFCs leading to a sharp deceleration in the growth of credit extended by HFCs. Since then, there has been a series of interventions from the Government of India to facilitate adequate liquidity flow to these entities from the Banking sector such as, Liquidity Infusion Facility (LIFt), Partial Credit Guarantee Scheme (PCGS) of Government of India for buy-out of rated asset pools of HFCs/ NBFCs, relaxed norms of RBI for securitization of assets etc. The HFCs have majorly been funded through capital market and bank borrowings. Since FY2019, funding via bank credit has increased as the NPA situation in banks improved and the access to the capital markets became costlier for certain HFCs.
As on January 2020, there were 100 HFCs, of which only 18 were deposit taking entities. Out of the 100 HFCs, 76 HFCs with 82% share in total credit and 91% of the total Housing Loan of all HFCs have shown a positive asset growth of 21% post IL&FS default. Their asset book or total loan book has increased by 21% during the 16 months period from Rs 8.28 lakh crore on September 2018 to Rs 10.02 lakh crore on January 2020 with primary source of funding of Rs 23,000 crore by National Housing Bank (NHB) during the period.
The Company earned total revenue of Rs 19,696.69 crore, registering an increase of 13.47 percent. The percentage of administrative expenses to the housing loans, which was 0.24 percent in the previous year, has remained constant at 0.29 percent during the financial year 2019-20.
Net Profit before tax and after tax stood at Rs 3,268.99 crore and Rs 2,401.84 crore respectively as against Rs 3,379.56 crore and Rs 2,430.98 crore, respectively, for the previous year. Profit before tax decreased by 3.27 percent over the previous year while profit after tax dipped by of 1.2 percent over that of the previous year.
As at 31st March, 2020 the loan book constituted of 94.42 per cent of retail portfolio and 5.58 per cent of project portfolio.
During the year the main thrust continues on individual housing loans. The Company has sanctioned 2,02,244 individual housing loans for Rs 48,498.71 crore and disbursed 1, 91,479 loans for Rs 44,318 crore during FY 2019-2020. Housing loan to Individual i.e. retail loans constitute 92.92 percent of the total sanctions and 94.42 percent of the total disbursements for the FY 2019-2020 as compared to 84.60 percent and 87.11 percent respectively during the FY 2018-19. The gross retail loan portfolio grew by over 8.10 % percent from Rs 1,81,569 crore as on 31st March, 2019 to Rs 1,96,340 crore as on 31st March, 2020.
The project loans sanctioned and disbursed by the Company during the year were amounting to Rs 3,693.19 crore and Rs 2,618.35 crore respectively. Corresponding figures for the previous year were Rs 9,154 crore and Rs 7,128 crore. These loans are generally for short durations, giving better yields as compared to individual housing loans.
Q3 FY 2020 – 2021
January 29, 2021; The Board of Directors of LIC Housing Finance Ltd. announced its un-audited results for the third quarter ended on December 31, 2020 following its approval by the Board of Directors in a meeting held in Mumbai on January 29, 2021 .
The results are in accordance with the Indian Accounting Standards i.e., Ind AS notifications issued by the Ministry of Corporate Affairs and National Housing Bank in April 2018.
Performance highlights for the quarter ended December 31, 2020
Total disbursements were Rs. 16857 crs in Q3 FY2021 as against Rs. 13177 crs for the corresponding period in FY2020 up by 28%.Out of this, disbursement in Individual Home Loan segment registered a healthy growth of 36% to Rs. 14511 crs from Rs. 10655 crs, whereas project loans were Rs.852 crs compared with Rs. 931 crs for the same quarter in previous year.
The Company's Revenue from operations were Rs. 4907crs as against Rs. 4996 crs.
Net Interest Income (NII) was Rs. 1281 crs, as against Rs.1254 crs for the same period previous year.
Profit before Tax for the quarter was Rs. 969.64 crs as against Rs. 745.32 crs. a growth of 30%.
Net Profit after tax stood at Rs.727.04 crs compared with Rs. 597.53 crs during the same period in the previous year, a growth of 22% The Individual loan portfolio stood at Rs. 204444 crs as against Rs. 194004 crs, a growth of 5%. Project Loan portfolio stood at Rs. 15753 crs as on December 31, 2020 as against Rs. 14266 crs as on December 31, 2019. Total outstanding portfolio grew at 6% to Rs. 220197 crs from Rs. 208270 crs.
Net Interest Margin (NIM) for the quarter ended December 31, 2020 was 2.36% as against 2.34% in Q2 FY 21.
Under IndAS 16, asset classification and provisioning changes for future credit loss are reported on Expected Credit Loss (ECL) basis.
As per the same methodology, the provisions for ECL stood at Rs. 2948.05 crs as on December 31, 2020 as against Rs. 2584.72 crs as on December 31, 2019.The Stage 3 Exposure at Default as on December 31,2020 stood at 2.68 % as against 2.73% as on December 31,2019. Covid 19 related provisions stood at Rs. 212.01 Cr and provision for impairment stood at Rs. 186.53 Cr.
During the nine months ended December 31, 2020, total disbursements stood at Rs. 32860 crs as against Rs. 35611 crs for the same period of the previous year. Out of this, individual home loan segment registered disbursement of Rs. 27917 crs, as against Rs 28662 crs, whereas total disbursements under project loans stood at Rs. 1815 crs as against Rs.2205 crs for nine months ended December 31, 2019.
The Company’s Revenue from operations were Rs.14879 crs as against Rs.14777 crs.
Net Interest Income (NII) for nine months were Rs. 3740 crs as against Rs.3687 crs during the same period previous financial year.
Profit before tax (PBT) for nine months in FY2021 was Rs.2996.57 crs as against Rs.2442.27 crs, up by 23%, during the same period previous year.
Net profit after tax for the nine months ended December 31, 2020 was Rs. 2335.42 crs as against Rs. 1980.41 crs during the same period previous year, growth of 18%.
Speaking on the performance, Mr. Siddhartha Mohanty, MD & CEO, LIC Housing Finance Ltd said, “Considering the pandemic induced disruptions, its performance has been quite strong in the third quarter. LIC Housing Finance has registered a good growth in home loans in all segments including the affordable housing segment. LIC Housing Finance is strongly focused on controlling loan defaults, cost improvement and bettering market presence through digitization. The Housing Sector has witnessed a positive change in their operational environment over the past few months, mainly since the last quarter and the momentum continued in the December quarter. The company expect the same to continue in the Q4 as well. The Company expects to end the fiscal year on a positive note.”
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