Q1 Results: Developer Loans Hurt LIC Housing Finance's Asset Quality

LIC Housing Finance Ltd.'s first-quarter profit tumbled on higher provisions as delinquencies rose on developer loans for the lender.

Net profit fell 87% over a year earlier to Rs 153.4 crore in the April-June period, according to its exchange filing. The housing financier's net interest income rose 4.5% to Rs 1,275 crore.

The company reported an impairment cost of Rs 830 crore during the first quarter, up from Rs 56 crore reported a year ago. It was 15% lower than the preceding quarter.

Stage 3 default exposures, or loans in default for more than 90 days, stood at 5.93% of total advances as of June. That compared with 4.12% as of March and 2.83% as of June 2020.

Expected credit loss provisions rose to Rs 4,727 crore, up 77% year-on-year.

"There has been an increase in delinquencies, mostly due to economic activities being impacted in Q1," Y Vishwanatha Gowd, managing director and chief executive officer, said in a statement. "With improvement in economic activities and our increased and focused efforts in recovery, we are confident of controlling the same.”

The stress was also visible in the company's restructured loan portfolio. According to disclosures, LIC Housing Finance had restructured loans worth Rs 5,353 crore as of June. Of this, Rs 4,704 crore came from the builder loan book, while retail borrowers contributed Rs 648.7 crore. Against these restructured loans, the company holds provisions worth Rs 500 crore.

• The total loan portfolio stood at Rs 2.32 lakh crore, up 11% year-on-year.

• The individual loan portfolio rose to Rs 2.17 lakh crore from Rs 1.95 lakh crore a year ago.

• Of the individual loans, the home loan portfolio registered a growth of 13%.

• The company's developer loan portfolio stood at Rs15,601 crore as of June against Rs 14,641 crore a year ago.