LIC Housing Finance net up 53%

Buoyed by high growth in loans and a significant reduction in non-performing assets (NPAs), LIC Housing Finance (LICHF) has registered an increase of 53 per cent in its net profit to Rs 116.37 crore in the second quarter of 2007-08 from Rs 75.93 crore a year earlier.

LICHF's total income has increased by 37 per cent to Rs 527 crore in the second quarter from Rs 384.8 crore a year earlier, loan sanctions were up 69 per cent to Rs 2,268 crore and loan disbursals up 36 per cent to Rs 1,599 crore. 
 

BIG PICTURE Performance in Q2 FY08
Parameters	Rs crore	Y-o-Y %
Loan sanctions	2,268	69  ^
Loan disbursals	1,599	36  ^
Total income	527	37  ^
Net interest income	150	43  ^
Profit before tax	157	66  ^
Net profit	116	53  ^

Its net interest income improved by 43 per cent to Rs 150 crore in the quarter ended September 30, 2007. Its outstanding mortgage portfolio was Rs 19,135 crore for the six months ended September 2007 compared with Rs 15,959 crore for the six months ended 2006.

For this quarter, the average cost of funds is 8.55 per cent compared to 8.3 per cent in the same quarter last year. The average yield is 10.3 per cent for this quarter. The net interest margin is 3.21 per cent compared to 2.68 per cent for the quarter ended September 2006.

LICHF is also looking at enhancing its equity capital through a qualified institutional placement.

"We will engage merchant bankers and by December-January, it will take place. A private placement could happen ahead of the equity issue. LIC has 40.46 per cent stake in LICHF. We will talk to LIC whether (it wants) to dilute stake or other ways. Hopefully, the price of the issue will be Rs 300 as per market conditions," said S K Mitter, director and chief executive of LICHF. LICHF plans to raise over Rs 500 crore through the equity issue.

LICHF is targeting Rs 6,800 crore of sanctions and Rs 6,250 crore of disbursals by end of 2007-08. "We want to grow faster than the industry growth of over 28 per cent," said Mitter. Its capital adequacy is 16 per cent as against the regulatory 12 per cent.

"The capital adequacy will increase to over 18 per cent after the issue," said Mitter.

On launching Reverse Mortgage product, Mitter said that the product is ready but the company is waiting for clarifications on taxation issues from CBDT. "In order for us to offer competitive rates on reverse motgage product, the product should have tax benefits."