Housing finance companies may face slowdown in H2 FY19, says Icra

The subdued credit portfolio growth, Icra said, is in contrast to the favourable period witnessed in the second half of the last financial year

Shayan Ghosh
Updated4 Jan 2019, 04:25 AM IST
Home loan portfolio of housing finance companies has grown at a faster pace of 18% y-o-y till 30 September 2018. Photo: Mint
Home loan portfolio of housing finance companies has grown at a faster pace of 18% y-o-y till 30 September 2018. Photo: Mint

Mumbai: Housing finance companies (HFCs) may see slowing credit growth in the second half of 2018-19 because of factors such as tight liquidity and intense competition, rating agency Icra said on Thursday. The subdued credit portfolio growth, Icra said, is in contrast to the favourable period witnessed in the second half of the last financial year.

“The home loan portfolio of housing finance companies has continued its growth trajectory and has grown at a faster pace of 18% y-o-y till 30 September 2018 as compared to the home loan book of banks, which grew at 16% y-o-y,” Icra said. The non-housing loan portfolio of HFCs grew at 29% y-o-y at the end of Q2 FY19.

Average loan ticket sizes across HFCs was around 25 lakh and more than 80% of the home loan portfolio was in the 10 lakh-1 crore bracket, which has reported better asset quality performance compared to lower and higher ticket sizes.

Gross non-performing assets (NPAs) ratio as on 30 September 2018 was 1.3% (slightly higher than 1.1% as on 31 March 2018), but tight liquidity and slowdown in growth could impact the asset quality in the non-housing loan segment, Icra cautioned.

“Within the housing loans segment for HFCs, the share of the self-employed segment has increased to 29% as on September 2018. Though some of the larger HFCs can compete with banks in the salaried home loan segment, most of the HFCs target self-employed customer segments or the affordable housing segment to optimize their yields,” it said.

While the self-employed segment offers good growth potential, the report said, asset quality in this segment is inferior with gross NPA of 1.5% as on Q2 FY19 (1.1% as on 31 March 2018) as compared with the salaried segment’s gross NPA of 0.5% as on Q2 FY19 (0.4% as on 31 March 2018).

“In our opinion, gross NPAs for HFCs in the home loan segment could increase to around 1.1-1.3% over the medium term from the current level of 1%. Moreover, higher gross NPA ratio on the non-housing loan segment could lead to increase in gross NPAs for HFCs to around 1.4-1.8% over the medium term,” said Supreeta Nijjar, vice-president and sector head, financial sector ratings, Icra.

The ability of HFCs to implement timely collection and recovery efforts in respect of the delinquent loans—repossessing the property wherever necessary, and selling the same in a timely manner—will be key, Nijjar said.

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.MoreLess
First Published:4 Jan 2019, 04:25 AM IST
HomeIndustryBankingHousing finance companies may face slowdown in H2 FY19, says Icra

Most Active Stocks

Tata Steel

167.05
03:57 PM | 16 JUL 2024
0.25 (0.15%)

Oil & Natural Gas Corporation

322.40
03:58 PM | 16 JUL 2024
-0.15 (-0.05%)

Bandhan Bank

198.30
03:41 PM | 16 JUL 2024
2.95 (1.51%)

Coal India

512.35
03:59 PM | 16 JUL 2024
14.4 (2.89%)
More Active Stocks

Market Snapshot

  • Top Gainers
  • Top Losers
  • 52 Week High

Natco Pharma

1,281.05
03:59 PM | 16 JUL 2024
73.2 (6.06%)

Century Textiles & Industries

2,217.55
03:48 PM | 16 JUL 2024
116.85 (5.56%)

Tata Teleservices Maharashtra

81.33
03:54 PM | 16 JUL 2024
4.23 (5.49%)

India Cements

323.05
03:55 PM | 16 JUL 2024
15.8 (5.14%)
More from Top Gainers

Recommended For You

    More Recommendations

    Gold Prices

    • 24K
    • 22K
    Bangalore
    75,246.00928.00
    Chennai
    75,099.00344.00
    Delhi
    74,806.00-460.00
    Kolkata
    75,466.00419.00

    Fuel Price

    • Petrol
    • Diesel
    Bangalore
    102.86/L0.00
    Chennai
    100.76/L0.00
    Kolkata
    104.95/L0.00
    New Delhi
    94.72/L0.00
    OPEN IN APP
    HomeMarketsloanPremiumMint Shorts