Mumbai: Private sector mortgage lender Dewan Housing (DHFL) expects loan growth in FY12 to slow down to 30-35% from a bullish 68% a year ago on surging interest rates and plans to raise up to Rs 11,000 crore in the year, a top official said on Friday.
The lender will focus on Tier-II and Tier-III cities, where housing demand is still pretty strong, for loan disbursements, chairman and managing director Kapil Wadhawan told Reuters over the telephone.
“The biggest challenge, I’d say, is rising interest rates and how this is going to impact the loan portfolios. A marginal impact cannot be ruled out,” he said, when asked about the main risk to the industry this year.
On Thursday, top lender State Bank of India told Reuters that a spree of interest rate increases by the central bank will take a toll on loan demand. Industry-wide loan growth was 21.4% in the fiscal year that ended in March 2011.
The Reserve Bank of India this month raised its key interest rates by a larger-than-expected 50 basis points to battle stubbornly high inflation, its ninth rate increase since March 2010.
DHFL’s loan disbursements at March-end stood at around Rs 650 crore.
It acquired Deutsche Postbank Home Finance Limited for Rs 1,080 crore last year and launched Aadhar Housing Finance to focus on low income Indian states. It has also signed a deal with Yes Bank for distribution of home loans.
“DHFL will now be catering to the home loan needs across all income segments,” Wadhawan said.
Earlier in the day, its Jan-March profit jumped 40% to Rs 58.65 crore while total income rose 60% to Ra 430 crore, sending shares up as much as 4% in a firm market.
The lender expects to maintain its gross non-performing assets, which narrowed to 0.67% from 1.16% a year ago, at under 1 percent going forward, Wadhawan said.
It expects debt borrowings for the current financial year at 100 billion rupees and will hit the capital market for Rs 750-100 crore by March.
“During the course of the year, with the impending merger (with Deutsche Postbank), we’d need some money, which we’ll raise in equity towards the fag-end of FY12.”
On Friday, its shares, valued at around $549 million, ended up 2.88% at Rs 240.9.