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HFCs asset growth halves to about 10% in H2FY19 on fund crunch: Crisil

Annual growth in AUM pegged at 12-14% in FY20 and FY21, from about 15% seen earlier; growth in first half of FY19 was 21%

Abhijit Lele  |  Mumbai 

Housing finance
Among the HFC segments, the distinction between the two halves was the sharpest for non-housing loans

With the markets and banks curtailing fund supply, the growth in assets of companies (HFCs) in India will dip to 12-14 per cent in FY20 and FY21, from over 15 per cent seen earlier, according to rating agency Crisil.

The liquidity challenges that followed the debt default by Infrastructure Leasing & Financial Services (IL&FS) in September 2018 pulled down growth in assets under management (AUM) of in the second half of fiscal 2019, a Crisil study shows.

Fiscal 2019 was a year of two contrasting halves. The first half saw stable growth and comfortable access to funding, with assets under management (AUM) growing at an annualised rate of about 21 per cent. However, the second half brought a reversal of sorts with AUM growth plunging to 10 per cent, Crisil said.

The industry AUM stood at Rs 12.4 trillion as on March 31, 2019, up 16 per cent year-on-year.

Crisil expects growth to be 12-14 per cent for in current and next financial year. This would be lower than levels seen in the past. This growth will be supported by mid-teen growth for the two largest players, constituting more than 50 per cent of the industry AUM.

Krishnan Sitaraman, Senior Director, Crisil Ratings, said access to funding will determine the growth prospects for As of now, lenders and investors seem to be differentiating among HFCs, preferring those with strong parentage and credit profiles and going slow on those with a large wholesale portfolios. This will be reflected in business growth differing for these entities.

Among the HFC segments, the distinction between the two halves was the sharpest for non-housing loans. These are primarily developer loans and loans against property (LAP), which made up a third of the total AUM of HFCs as on March 31, 2019. This segment grew at around 5% annualised in the second half, compared with about 28 per cent in the first.

Housing loans held up better, growing at about 13 per cent a year in H2 compared with 18 per cent in the first half.

First Published: Mon, July 01 2019. 15:38 IST
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