Affordable housing finance cos loan book grows 10% in June: Report

The total loan book of affordable housing finance companies (AHFCs) grew by 10 per cent to Rs 60,468 crore as of June 30, much lower than the last five-year average of 24 per cent, Icra Ratings said in a report.

The AHFC industry's reported gross NPA/Stage 3 (excluding data for one player) stood at 2.1 per cent as of June 30, 2021, the agency said.

The growth in the loan book moderated to 10 per cent y-o-y in FY2021 and Q1 FY2022 due to the lockdowns following COVID wave 2; while portfolio remained flat as on June 30, 2021, as compared with March 31, 2021, the agency's Vice President and Sector Head (financial sector ratings) Manushree Saggar said in the report.

The COVID 2.0 has exerted further pressure on the asset quality indicators for these players, the report said.

With stricter lockdowns across various states in Q1 FY2022, the collections for these AHFCs were impacted and unlike the moratorium and restrictions on bucket movement, which were available in Q1 FY2021, there were no such dispensations this time, it said.

Hence delinquencies, especially, in the softer buckets shot up significantly, the report added.

The 30+ days past due (dpd) for some select AHFCs increased to 7.2 per cent as of June 30, 2021, from an estimated 3.2 per cent as of March 31, 2021, though headline 90+ dpd remained under control, it said.

With steady improvement in collection efficiencies since June 2021, forward bucket movement is likely to be contained for most players, though resolution/rollbacks could take longer as it would be difficult for the borrowers of these AHFCs to clear multiple instalments at the same time, Saggar said.

We expect GNPA/Stage 3 to be 3.6-3.9 per cent by the end of March 2022 compared to 3.3 per cent as of March 31, 2021, she said.

According to the report, the liquidity profile of these entities is expected to remain comfortable, supported by the sizable on-balance sheet liquidity being maintained by these players.

Given the likelihood of elevated credit costs as compared to the pre-COVID levels, the return on assets (RoA) is likely to remain at 2.2-2.4 per cent in FY2022 over the range of 1.8-2.4 per cent during FY2017-21, despite the improved scale of operations, Saggar added.