It is a matter of pride for us at Can Fin that we celebrated three successful decadesof existence in the last fiscal year. Our eventful journey from humble beginnings withthe twin objectives of promoting home ownership and increasing the housing stock in thecountry has now helped us transform into a prominent housing finance company in thecountry. The ever increasing demand for housing on account of burgeoning population andrapid urbanization makes the housing finance market more relevant than ever.
While we look back with fulfillment over our rich legacy our focus remains on theexciting and challenging future lying ahead. Among the many one of our strengths has beenaddressing the customer needs with transparency. Our business expertise attention todetail faster turnaround time and high governance standards has positioned us as atrusted and preferred housing finance company in the market.
The implementation of demonetization RERA and GST will have a positive effect on theeconomy in the long run. Though initially the implementation has shown a knee jerkreaction in a negative manner we are confident that with the passage of time thepositive effects of these reforms will result in a healthy and sustainable growth in thehousing sector.
While demonetization has helped in normalization of prices by discouraging the cashdeals RERA offers the much needed protection to the genuine home buyers. Now that theIndian Real Estate industry has got its first regulator confidence of average home buyeras well as Financial Institutions have got a boost. Implementation of RERA by variousstates and the increasing traction in affordable housing segment have led to revival ofgrowth in most of the geographies.
Government's initiative of Housing for all by 2022' and the consequent incentivesto the sector i.e. extended coverage of MIG under Pradhan Mantri Awas Yojana (PMAY)Credit Linked Subsidy Scheme increase in carpet area norm for eligibility under CLSSrationalization of GST rates in favour of affordable housing etc. are going to be the keydrivers of growth in ensuing years.
We were the first housing finance company to have introduced Affordable Housing LoanCentres (AHLCs) to lend exclusively in the peripheral areas of Tier-I Tier-II andTier-III cities. During the year we opened 10 more AHLCs taking the number to 20 and haveplans to increase it to 30 shortly. Since the land and building values are more affordablein these areas lending under the New Gruhalakshmi Rural Housing / Urban Housing (New GRHS/ LUH) and the Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY)are being focused as potential growth segments.
With new loan approvals of H5760 Crore and disbursements of H5207 Crore during theyear our loan book grew by 18.30% to RS 15743 Crore as on March 31 2018. Asset UnderManagement (AUM) of the Company has grown over the last 5 years with a CAGR of 31%.
The year witnessed your Company surpass the milestones of RS 15000 Crore under Loanbook H500 Crore of Net Interest Income and H300 Crore of PAT for the first time ever.
We maintained our profitability levels by recording a 28% increase in net profit and asteady Net Interest Margin (NIM) of 3.53%. Backed by strong AAA rating for ourborrowings/NCDs & A1+ for CPs and a healthy mix of borrowings from Banks NHB &money market your Company enjoys one of the finest cost of funds. A significant portionof our short and medium term funds are raised from money market while the long term fundsare sourced from Banks & NHB. This is an optimal method currently being followed andwe are always on the lookout for cost effective alternate sources of borrowings to sustainthe margins & profitability.
Our robust culture of professionalism and proactive risk management helped us delivergreater value for our stakeholders. We recorded a steady ROE of 24.91% and ROA of 2.09%for
FY17-18. Cost to income ratio improved significantly to 15.21% from 17.02% a year agoaided by an improved branch/ employee productivity and significant cost control at variousoperational levels.
While industry experts remain apprehensive about vulnerability of small ticketaffordable housing loans to higher delinquency levels at Can Fin we have always beenconsciously conservative in our lending approach. With 89.50% of the loan book coming fromhousing loans and 73% of the portfolio comprising of salaried and professional borrowersyour Company has been able to return one of the best in industry asset quality with grossNPA level of 0.43% as at March 2018.
We remain buoyant with regard to our market expansion to potential geographies beyondour home turf and covered 8 new cities / towns under our network in the last fiscal. Wehave plans to open about 20 new branches during the current fiscal. We also acquiredlicense from the IRDA and began insurance agency business from January 2018. The insurancebusiness adds to our business competitiveness and widens our service portfolio.
We have always believed in value creation for stakeholders at large. As we make steadyprogress on our business front we continue to make contributions towards the society andindividuals that need assistance. During the year under review we spent H3.38 Crore inempowering lives of the underprivileged towards education infrastructure development andwomen empowerment.
In closing I remain optimistic for India's economic growth in the ensuing yearsbacked by positive reforms and rising market demands in the real estate industry. As westep into our fourth decade we look forward to the times ahead with more enthusiasm thanever before. The encouraging reforms and incentives by the government will only boost thehome ownership' aspirations among people. Your Company remains committed to pursueexcellence in business growth backed by strong corporate governance and able riskmanagement framework.
I take this opportunity to express my gratitude to the Board of Directors for theirsound advice consistent support and guidance over the years. I also wish to express mydeep appreciation towards our management and staff members for their continuing commitmentand dedication.
As we step into a New Era' with New Possibilities' we have already put inplace a platform in the last three decades to achieve sustainable growth in profitabilityand stakeholder wealth. I thank the National Housing Bank Canara Bank and otherstakeholders for partnering in these three eventful decades of our journey. Our vision ofachieving loan book of H40000 Crore by FY 2022 will keep us motivated as we continue toexpand our business notwithstanding the pitfalls and hurdles ahead in view of the everchanging and challenging economic scenario. Our diversified workforce and understanding ofthe financial needs of our borrowers will only help us reach greater scales of success. Myteam and I look ahead to another exciting year of new possibilities and a new journey!
S K HOTA