With an upturn in the real estate cycle, LIC Housing Finance plans to step up project finance lending and increase the share of such disbursements to 10 per cent in 2022-23 (FY23), from the present-day 5 per cent.
On the project loan side, in the first half of 2021-22 (FY22), activities were not in full swing. Also, business was impacted by the third wave in the second half of FY22. Now the business environment is clear. There may be a drawal of money for existing projects. Plus, there is a pipeline of projects being considered in excess of Rs 1,000 crore.
With this, “the company will take the share of project finance from 5 per cent to 10 per cent in incremental business in the current year”, said Y Viswanatha Gowd, managing director and chief executive officer, LIC Housing Finance.
Its two key business segments are individual home loans and project finance for real estate.
The disbursements in project loans were down to Rs 428 crore in the reporting quarter ended March 31, 2022, from Rs 1,197 crore in the fourth quarter (Q4) of 2020-21 (FY21).
The project loan portfolio stood at Rs 12,978 crore as on March 31, 2022, against Rs 15,956 crore as on March 31, 2021.
Its total disbursements were at Rs 19,315 crore in Q4FY22, against Rs 22,362 crore for the corresponding period in FY21. Moreover, disbursements in the individual home loan segment were at Rs 16,341 crore, against Rs 19,010 crore in Q4FY21.
Gowd said the current year promises to be far better. A hardening interest-rate scenario notwithstanding, the economic environment is much more positive in the country, compared to FY21 and FY22. This year (FY23), incremental growth of 15 per cent will be ensured in disbursements.
The total outstanding portfolio grew at 8 per cent to Rs 2.51 trillion at the end of March 2022, from Rs 2.32 trillion a year ago.
The individual home loan portfolio expanded 13 per cent at Rs 2.04 trillion, against Rs 1.8 trillion as of March 31, 2021.
The turn in the real estate cycle has improved the climate for resolution of projects that were facing problems in execution and cash flows. In Q4, it was able to recover Rs 350 crore in some non-performing assets (NPAs) in the builder and high-value loan segment.
The NPAs in the project loan segment were Rs 4,124 crore. Plus, project loans under one-time restructuring were Rs 3,900 crore at the end of March 2022, according to the data shared in an analyst call.