With a recovery in the housing cycle, LIC Housing Finance plans to scale up project finance lending and increase the share of such disbursements to 10% in 2022-23 (FY23), from 5% currently.
On the project lending side, in the first half of 2021-22 (FY22), business was not booming. Additionally, business was impacted by the third wave in the second half of FY22. Now the business environment is clear. There may be a withdrawal of money for existing projects. Additionally, there is a pipeline of projects being considered exceeding Rs 1,000 crore.
With this, “the company will increase the share of project finance from 5% to 10% in the current year’s additional business,” said Y Viswanatha Gowd, Managing Director and Managing Director of LIC Housing Finance.
Its two key businesses are real estate loans to individuals and the financing of real estate projects.
Project loan disbursements fell to Rs 428 crore in the quarter ended March 31, 2022 from Rs 1,197 crore in the fourth quarter (Q4) of 2020-21 (FY21).
The loan portfolio of the project stood at Rs 12,978 crore as of March 31, 2022, compared to Rs 15,956 crore as of March 31, 2021.
Its total disbursements stood at Rs 19,315 crore in Q4FY22, compared to Rs 22,362 crore for the corresponding period of FY21. Additionally, disbursements in the individual home loans segment stood at Rs 16,341 crore, down from Rs 19,010 crore in Q4FY21.
Gowd said the current year promises to be much better. Despite a tighter interest rate scenario, the economic environment is much more positive in the country, compared to FY21 and FY22. This year (FY23), an additional 15% growth will be secured in disbursements.
Total portfolio outstanding increased by 8% to reach 2.51 trillion rupees at the end of March 2022, compared to 2.32 trillion rupees a year ago.
The portfolio of individual home loans increased by 13% to Rs 2.04 trillion from Rs 1.8 trillion as of March 31, 2021.
The turnaround in the real estate cycle has improved the climate for resolving projects that encountered execution and cash flow problems. In the fourth quarter, it was able to recoup Rs 350 crore in some non-performing assets (NPAs) in the builders and large loans segment.
NPAs in the project loan segment were Rs 4,124 crore. Additionally, project loans under one-time restructuring stood at Rs 3,900 crore at the end of March 2022, according to data shared on a call with analysts.