LIC Housing Finance’s Q2 FY26 earnings call highlighted a focus on balancing growth with profitability. While facing challenges from BT, the company aims for double-digit growth by year-end. Strategies include re-evaluating distribution models, exploring co-lending opportunities, and improving asset quality. Discussions covered NIM, PLR changes, and competitive intensity from PSU banks, with an emphasis on margin protection and controlled growth in construction finance.
Financial Performance Overview
LIC Housing Finance reported a revenue from operations of ₹7,163 crore, a 3% increase year-over-year. The outstanding loan portfolio reached ₹3,11,816 crore, growing by 6%. Individual housing loans constitute 85% of the total portfolio, amounting to ₹2,64,096 crore. Total disbursements for the quarter stood at ₹16,313 crore.
Key Financial Metrics
Net Interest Income (NII) was reported at ₹2,038 crore. The Net Interest Margin (NIM) for Q2 FY26 was 2.62%. Profit Before Tax (PBT) for the quarter reached ₹1,704.71 crore. Profit After Tax (PAT) for the quarter was ₹1,353.87 crore, a 2% year-over-year growth.
Asset Quality and Provisions
Stage-3 exposure stood at 2.51%. Total provisions reached ₹5,074 crore, reflecting a provision coverage ratio above 53%. A technical write-off of ₹133 crore was made during the quarter.
Funding and Costs
The cost of funds stood at 7.42%. Incremental cost of funds was 6.73%. The company has made a technical write-off of ₹133 crore, with recoveries from written-off loans amounting to ₹83 crore. The management expects asset quality to improve further.
Growth Strategies and Challenges
The company acknowledges challenges in balancing growth and spreads, particularly with Bullet Transfers (BT). There was 24% increase in disbursements from Q1 to Q2, but growth has been impacted by Bullet Transfers. The BT challenge is expected to subside as observed in October trends.
Strategic Initiatives
The company plans to enhance growth through alternative channels like lead business and strengthening LIC HFL Financial Services Limited (FSL). Focus is given to increasing agent productivity and developing direct business channels. The Board is guiding a comprehensive restructuring of the company, including distribution models. LICHFL is exploring co-lending opportunities to boost its portfolio. There are aims to target a construction finance channel of roughly ₹5,000 crores this year.
Competitive Landscape
The company noted intense competition from Public Sector Banks (PSBs), but aims to maintain margins over aggressive growth. It also seeks to gradually shift focus towards the self-employed segment, setting up a separate team for affordable housing.
Source: BSE
