Indiabulls Housing Finance Q2 profit jumps over 21% to Rs 10.4 billion

Total loans outstanding up 28.9% to Rs 1.29 trn; gross NPA at 0.77% for the quarter

Indiabulls Housing Finance (IBHFL) registered a net profit of Rs 10.44 billion in the second quarter of FY2019, as against a net profit of Rs 8.61 billion in the corresponding quarter of FY2018, posting a year-on-year growth of 21.2 per cent. 

Total loans outstanding grew by 28.9 per cent to Rs 1.29 trillion as of September 30, 2018, compared to Rs 1 trillion at the end of September 30, 2017. Total loan disbursal for Q2FY2019 stands at Rs 110.34 billion.

As per the investor presentation, the company's liquidity position stands at Rs 212.5 billion as of end-September and the 30-day Liquidity Coverage ratio stands at 401 per cent.

“We have a 4x cover of high-quality liquid assets to 30-day net outflows and have a 135% cover on 6 months’ liabilities outflows. Home sales, especially in our core segment of mid-income affordable housing have been strong and strengthening by the passing day. We are very well positioned to grow our business by 20% plus in the current macro environments,” stated Gagan Banga, Vice Chairman and managing director at IBHFL.

Net Interest Income has reduced marginally to Rs 16.31 billion at the end of Q2 FY2019 from Rs 16.9 billion at the end of the corresponding quarter of FY2018. 

The spread on book now stands at 324 basis points (bps) in Q2FY2019 as compared to 323 bps during the corresponding quarter of the previous financial. 
 
Ashwini Hooda, deputy managing director of IBHFL told Business Standard, “Our margins have remained stable as whatever increase in interest costs have been passed onto customers. So we do not foresee here to be any issues. The NII is a tad lower because of lower income on the cash or liquidity that we maintain on the balance sheets.”
 
“There have been mark-to-market (MTM) losses in the investments we make in mutual fund’ liquid schemes or Government bonds, which has resulted in lower incomes on our cash holdings, therefore there has been an impact on the NII,” he said. 

Borrowing from debentures and securities increased substantially from Rs 558.4 billion in Q2 FY2018 to Rs 732.8 billion at the end of Q2FY2019. This increase in market borrowings from debt instruments contributed to 61.9 per cent of the incremental borrowing for the company. 
 

Total borrowings from bank loans stands at Rs 410 billion in Q2 FY2019, contributing 14.1 per cent to IBHFL’s incremental borrowing, whereas in Q2 FY2018 bank lending stood at Rs 378.3 billion. 

“The impact of lower income is to the tune of Rs 1 billion for this quarter,” Hooda said, “mutual fund investments gave almost zero returns in the last nine days of the quarter and there were MTM losses on government bonds and tax-free bonds.”

Going forward the company is planning to raise funds from multiple sources including US$ 250 million External Commercial Borrowings being planned in the coming months having already raised US$ 270 million this financial year. 

Hooda said IBHFL has already conducted the securitisation of Rs 50 billion worth of loans in the first two quarters with plans to conduct another round of securitisation Rs 8 to 10 billion in the rest of the year. 

Further, the company will raise Rs 30 billion from the corporate bond market and as of date they have more than Rs 50 billion of sanctioned bank lines. 

“People are currently on the wait-and-watch mode and will be for the next month, so hopefully by mid-November, we will see liquidity come back into housing finance companies or some form of government support come to the market, and by December we should see health loan disbursement pickup in the system,” he said. 

Gross non-performing assets (GNPA) stands at 0.77 per cent at the end of Q2 FY2019, having reduced by 01 basis point from Q2 FY2018. GNPA stands at Rs 9.94 billion for Q2 FY2019 as against Rs 9.8 billion in Q2FY2018.

Of the total Rs 1.29 trillion loan assets around Rs 1.28 or 99.2 per cent of the loan book are ‘standard’ in terms of asset quality. 

Stage 3 loan assets stand at Rs 9.9 billion, or 0.77 per cent of the total book. 

Total provisions set aside stand at Rs Rs 6.2 billion or 25 per cent of the stage 3 loan book.  

Net non-performing assets (NNPA) for Q2 FY2019 is at Rs 7.47 billion or 0.58 per cent, as compared to Rs 7.36 billion 0.56 per cent in Q2FY2018.

CRAR stands at 23.39 per cent for Q2 FY2019, having grown from 21.72 per cent in Q2 FY2018. 

IBHFL's stock price closed at Rs 948.70 on the Bombay Stock Exchange, up by 1.89 per cent from its closing price on last Friday.