Muted loan growth a concern, aim for a 10-12 % jump in book in FY 2025

LIC Housing Finance (LICHF's) chief executive T Adhikari on Thursday said a muted loan growth of 4 % is a matter of concern for the lender and it will aim to accelerate it to 10-12 % in this financial year.

The home finance company will also look at upping its play in the affordable housing segment in the new fiscal, he said, adding that its share of the overall book will double in three years.

"The muted loan growth of 4 % is a matter of concern, but I am confident of double-digit growth in FY25," Adhikari told reporters a day after the company announced its March quarter results showing a nearly 8 % dip in profits.

When prodded further, he said the loan book will grow in lower-double digits, between 10-12 %, and added that the overall quantum of disbursements should touch Rs 75,000 crore in FY25 from the Rs 50,000 crore in FY24.

In the fiscal year gone by, he said an organizational restructuring exercise kept the overall activity depressed in the first half of the fiscal, while activity started off from the third quarter and normalized in the fourth quarter which showed a 15 % growth on-year.

On the affordable housing plans, he said the company has implemented a plan of opening up offices in tier-III centres, putting the people and systems, and added that they plan to disburse Rs 6,000 crore of such loans in FY25.

When asked whether asset quality is a challenge in such loans, Adhikari said the company's experience suggests that a larger quantum of non-performing assets come from the high-ticket loans while the low-ticket ones have better repayment record.

The company has not been focused on the affordable housing segment till now, but still over 10 % of the loanbook comprises loans falling into this category, he said, adding that the plan is to take the overall contribution up 25 % in the next three-four years.

The company will be cautious on the project finance and grow the book by 5-7 % in FY25 as against a de-growth in FY24, Adhikari said, stressing that it is not away from the segment but would want to price loans in such a way that it makes a certain margin.

A senior company official said it is planning for a net interest margin of 2.7-2.9 % in FY25, which will be slightly below the number achieved in Q4FY24.

To a question on the RBI's proposals on increased provisioning in the project loans front, Adhikari said the company's book which can attract higher provisioning currently stands at Rs 3,000 crore and it will have to act as per the regulatory measures.The company, which borrowed Rs 20,000 crore by issuing non-convertible debentures in FY24, aims for an uptick in the number in sync with the asset growth, Adhikari said.LICHF shares closed 3.60 % higher at Rs 652.95 apiece on BSE on Thursday.