Hit by economic slowdown and dip in customers repayment capability, ICICI Home Finance Company, subsidiary of ICICI Bank, reported about 3.5 fold growth in its non-performing assets at Rs 161.43 crore at end of September 2009 from Rs 36.03 crore a year ago.
NPAs, after provisions, stood at Rs 127.14 crore at end of September 2009 up from Rs 23.92 crore at the end of September 2008.
In per cent terms, ICICI Home Finance Company’s gross NPAs rose to 1.34 per cent at end September 2009 from 0.31 per cent a year ago, according to information filed with Bombay Stock Exchange (BSE) on Monday.
Company’s net profit for the six months ended September 2009 rose to Rs 54.36 crore from Rs 39.03 crore at end of September 2008. The total income rose to Rs 800.89 crore from Rs 647.41 crore.
Its outstanding loan book as on September 2009 stood at Rs 12,004 crore, up from Rs 11,114 crore at end of March 2009.
In response to query on incidence of rise in NPAs, ICICI HFC spokesperson said the NPA ratio in the last two quarters have remained stable with improving collections and economic outlook. The company did not elaborate on the reasons for rise in bad loans (NPAs).
An analyst with private broking house said the downturn in the economy had hit the business growth and incomes of housing finance companies. The higher interest rates (read high monthly installment) also adversely affected the repayment capability of clients, which possibly led to jump in loan defaults.
The loan delinquency as per cent of outstanding portfolio for the housing sector was around 1 per cent. In case of some aggressive home finance institutions it was around 2 per cent, analyst said.
LIC Housing Finance, its ICICI HFC’s competitor, reported drop in its gross Non Performing Assets recorded 1.85 per cent as on September 2008 to 1.28 per cent as of September 2009. The Net NPAs of the Company declined from 0.87 per cent as of September 2008 to 0.62 per cent as of September 2009.
Analyst with rating agency said there was a definite improvement in the job market on signs of economic recovery. Plus, the interest rate on home loans has declined by at least 150 basis points in last 12 months. This translates into lower monthly repayment burden. The further addition to defaults in expected to slowdown in the coming months.
“The company has been witnessing healthy growth in the home loan segment and home loans will continue to be one of the focus areas for the company”, ICICI HFC spokesperson said.