Ladies and gentlemen, good day and welcome to the LIC Housing Finance Q1 FY26 Investor Conference Call hosted by Axis Capital. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Agarwal from Axis Capital. Thank you, and over to you, sir.
Thank you, Manav. Good day, everyone, and welcome to this earnings call of LIC Housing Finance. From the management team, we have Mr. Tribhuwan Adhikari, Managing Director & CEO, and Mr. Lokesh Mundhra, CFO, to take us through the key highlights of the results, post which we will open the floor for Q&A. Over to you, Adhikari sir, for your initial remarks.
Yeah, thank you, Praveen. Good morning, friends, and welcome to all of you to the Post-earnings Conference Call of LIC Housing Finance Limited. As you are aware, LIC Housing Finance declared its Q1 FY2026 results last Friday. Before I start the highlights of the Q1 results, I would like to outline the few developments in the economy over the quarter. In its June 2025 MPC meeting, the RBI surprised the markets with a 50 basis point repo rate cut, bringing the policy rate down from 6% to 5.50%. Also, fiscal stance from accommodated to neutral. Also, 100 basis point CRR reduction was announced, which was expected to inject approximately INR 2.5 lakh crore of liquidity into the system. The company, keeping in line, also reduced its rates of interest on a new home loan by 50 basis points from 19th of June 2025, coinciding with the company's 36th Foundation Day.
New home loan rates now start at 7.50%, which is very, very competitive. The banking system continues to enjoy a surplus liquidity position, amplified by the CRR cut, and this made availability of funds to HFCs like us, I would say, in abundance. With this, we present the financial highlights of the company for the quarter, which is as follows: total revenue from operations was INR 7,233.14 crore, as against INR 6,783.67 crore for the corresponding quarter of the previous year, up by 7%. Outstanding loan portfolio stood at INR 309,587 crore, as on 30th of June 2025, against INR 288,665 crore, as in during the same period of last year, reflecting a growth of 7%. Individual home loan portfolio stood at INR 262,411 crore, as against INR 246,275 crore, again up by 7%, and comprising 85% of the total loan book.
Total disbursements for the quarter were INR 13,116 crore, as against INR 12,915 crore. Out of that, disbursements in the individual home loans were INR 11,247 crore, as against INR 10,932 crore. Disbursements in project loans were INR 156 crore, as against INR 521 crore for the same period of last year. We have seen disbursements pick up gradually during the latter part of the first quarter and in the month of July. Net interest income stood at INR 2,065.78 crore for Q1 of FY2026, as against INR 1,989.08 crore of Q1 FY2025, up by 4%. Net interest margin for Q1 stood at 2.68%, as against 2.76% of Q1 of FY2025 and 2.86% of Q4 FY2025. PBP for the quarter was INR 1,699.16 crore, as against INR 1,628.43 crore in Q1 of FY2025 and INR 1,769.58 crore of Q4 of FY2025.
PAT for the quarter stood at INR 1,359.92 crore, as against INR 1,300.21 crore for the same period of the previous year. In terms of asset quality, Stage 3 default as on June 30, 2025, stood at 2.62%, as against 3.30% as of June 30, 2024. Total provisions as on June 30, 2025, stood at INR 5,051 crore, reflecting a provision coverage of approximately 51%, as against 55% during the same period of last year and 51% of Q4. Technical write-off of INR 30 crore has been made in the quarter. On the funding side, our cost of funds stood at 7.50% as on June 30, 2025, as against 7.76% as on June 30 of last year and 7.73% as of March 30, 2025, reflecting a reduction of 26 basis points YoY.
Our incremental cost of funds stood at 6.97% for Q1 of FY2026, as compared to 7.66% for Q4 of FY2025 and 7.82% for Q1 of FY2025. All in all, the first quarter of the financial year has been quite flat, if I may say so, but we are seeing traction moving forward. Q1 is a bit slow. We are a bit slow to take off, but we are very confident of the accelerated movement happening in Q2, Q3, and Q4. With this brief introduction, I'd like to invite you for your queries. Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two.
Participants are requested to use handsets only while asking the questions. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have our first question from the line of Mahrukh Adajania from Nawama Wealth Management. Please go ahead.
Hello, sir. Hi, hi. I first had a question on credit costs. Our guidance was 9- 15, right? Our credit costs are much higher than that range this quarter. How does it pan out going ahead? Because recoveries don't seem to be coming through in the way we had enlisted. Anyways, a lot of people are reporting, you know, however small, some incremental stretch in asset quality. Where do we stand on that front? That's my first question. I have others.
Okay, Maruk. As regards the credit cost, the credit cost for Q1 of FY2025 is at 5 basis points, right? If you compare this for the whole of last year, it was about 9 basis points. Yes, I do agree. Like others, we are also witnessing some pressure on the collection efficiency. There is a slowdown in the month of June. We are not worried because by and large, our June quarter is slow, largely because here in LICHFL , this is in the month of May and half of June, I would say, first half of June, this is the promotion and transfer season for all of us. There is a lot of movement of personnel from place to place and from vertical to vertical. That does dampen the kind of effort and the focus that there is. We are not worried.
The guidance which we had given for the credit costs, I believe we'll be able to maintain it going forward. There has been a slight increase in provisioning as well as a slight increase in NPA. NPAs have gone up by about 500 or so during the quarter. We are not worried. I think we can recover that. We are seeing signs of recovery already in the month of July. Now that all my personnel or my resources are settled down and in place, have taken over their new positions, new postings. I believe in Q2 and in the later quarters, we will continue to do well as we've done last year. Of course, there have been no big resolutions this quarter. Many kind of big cases are in various stages of legal recourse and discussions and negotiation.
Hopefully, looking forward, I think we could look forward to resolution of another two big cases which would considerably impact our credit costs and our NPAs and provisioning, of course.
Yeah, Maruk.
Yes, sir.
Yeah. You just see the last year, Q3 and Q4. That time the credit costs were negative in Q3. That was negative by 0.07%. In Q4, it was just 4 bps only. In totality, last year it was 9 bps. Definitely, what our MD and CEO is saying, we'll maintain our credit costs within the limits.
Sure. No, what I meant was that if you annualize that INR 192 crore of provisions, then it works out to 25 basis points. Anyways, sir, what was the... Sorry.
Yeah, it cannot be like this. It's not like your interest costs, you are just multiplying credit costs of one quarter by four. That is not the correct way. If you just compare with the last year's figures, in Q3 it was negative and in Q4 it was just 4 bps. I'm sure that in the coming quarter it will come down.
Because of recoveries?
Yeah, it's not recoveries.
Okay. Sir, what was the softness? You said there was some softness in June. In which pocket? In general.
It was basically in the retail segment, Maruk. It was basically in the retail segment. Whatever NPA increase we have seen, INR 500 crore, as I said, it was mostly in the retail segment only. That is where we have seen some pressure on the collections. I believe nothing worrying. I think going forward, this can be made up. We have intensified our recovery operations. Yes, a part of this loosening or weakening, if I may call it, was due to movement of personnel and posting of new people into these verticals, recovery verticals especially. That is fixing itself now.
Sure. Has July recovered?
Yeah, to some extent. Of course, it's not huge, but yes, to some extent, it is much better than what it was in June.
Okay. Sir, just on growth then, the disbursement growth, it's soft this time. I am talking about YoY, not QQ. How do we scale it up from current levels? Competition is also intensifying. I'm told that PSU banks are now trying to compete across segments. Their rates are also very favorable. In that context, how do we build up?
Yeah, sure. As far as the competition is concerned, competition is intense. Unfortunately, LICHFL , we are competing with banks because we are mostly into the prime segment in which banks are. Yes, there is a lot of competition. There is a war going on. Of course, as far as the rates are concerned, we have also come down to the bank level. They are offering loans at 7.50%, which most of the bigger banks are offering. There are some smaller banks which are giving loans at even less than that. Yes, competition is there and is expected to be there in this segment also. The other part of it, why I would say growth in disbursement was slightly low in Q1, partially, the rate cuts from February to April, 100 basis points. If you must be knowing, banks are directly linked to the recovery.
The lending rates of banks are directly linked to the recovery. As soon as there is a recovery cut, the rate automatically gets reflected in the lending rates by the banks. Unfortunately, or fortunately, both ways, I would say, we are linked to a PLR, not fully repo. We have to take a call on what to do with the rates as and when the rate cut is there. To some extent, I do agree. I think we were slightly delayed in lowering the rate. The banks cut it immediately because they had to cut it immediately since it was linked to repo. We took our time, probably a little bit more time than what should have been. That was one of the reasons. The other reason I personally feel, people in India are smart.
I believe they are all aware that there is a cycle of reduction in rates going on and maybe waiting for the cycle to finally conclude or come to some finality before they take a call of entering the thing. Yes, there was a slight, I would say, a lesser demand than what was expected. When the rates were cut, we were expecting a huge boost to the demand. That did not happen. That was witnessed across the industry. Hopefully, going forward, I believe they should pick up. Of course, our movement of personnel and people, that also has an impact on the disbursement in Q1. As I said, that is over. Q2 in July, there has been a record growth. We have done better in June than in July. Going forward, we do expect these disbursements to grow.
Okay, sir. Thank you. Thank you.
Thank you. We have our next question from the line of Avinash Singh from Emkay Global. Please go ahead.
Yeah, hi. Good morning. Thanks for the opportunity. A couple of questions. The first one is now, I mean, as RBI has cut 5 basis points of recovery and the home loan interest has gone down. My question is that, I mean, on your existing book that is largely, I mean, a floating rate by the year loan, how much of that book has been repriced and how much is yet to be repriced? Basically, assuming that, I mean, the rate is staying where it is in the recovery, what kind of a yield kind of inflation do you see over, I mean, the next two quarters? Given that your borrowers are also repricing quite fast this time, what kind of overall yield inflation do you see over the next two, three quarters?
Yeah. I mean, as far as 100% recovery has been false, and you said that the cost of home loans have gone up, gone down everywhere. That's not true. Public sector banks have done it because they are linked to the recovery. They have no choice. They have no alternative. If you look at the NBFCs and HFCs, as far as I know, from my personal knowledge, apart from LIC Housing Finance and Ancient Homes, nobody else has a cut rate. HDFC maybe to some extent, but others are where they were. The cost of borrowing, I think, has gone down to some extent. For the existing borrowers, they continue to remain where they were. As far as we are concerned, we have cut our rates by 25 basis points for existing borrowers also. This came into effect from the first of June.
Now, since our loan book is comprised of loans with monthly reset and quarterly reset, approximately one-third of our book has already been repriced. The remaining two-thirds get into the repricing from the first of July. That will have some impact on our, I would say, yield on advances. If I talk of yield on advances, the incremental yield on advances has come down by about 50 basis points from 9.4 at the end of Q4 of last year to 8.9. Cumulatively, it has come down by about 19 basis points from 9.79 9.60. Comparatively, if you look at the incremental cost of borrowing, the incremental cost of borrowing has come down by 59 basis points from 7.66 to 6.97. The cumulative cost of borrowing has come down by 23 basis points from 7.73 to 7.50.
Whereas there is a compression in the yield on advances, there is also a compression on the cost of borrowing. Net net, I do not believe my NIMs with that at 2.68 as at the end of Q1. I don't think there'll be too much of a deviation in the NIMs. Whatever compression is there in the yield on advances will be offset by the compression in the borrowing.
Yeah. I also want to say, if you compare our spread now, you'll realize that our spread has increased by 4 bps. Now it is 2.10%. If you compare it with the previous quarter sequence, the new quarter is 2.06%. We are getting more benefit in the cost of borrowing. Incrementally, it has come down by almost 69 bps. Okay?
Yes, sir. In fact, that's why I was explaining to you that my question was that, look, clearly the public sector bank, I mean, the competition is on the private sector and public sector bank. In that context, my question was more that the 25 basis points cut you have kind of done on your existing portfolio where, once the MD said that one third portfolio has been repriced and the rest will be repriced over time. My question was more that, okay, is this 25 basis points cut, I mean, makes you kind of offering attractive enough to control balance transfer or will you be required to bring in more cuts? I mean, is this 25 basis point cut sufficient or will you be required to respond with a higher cut? Thanks. Because you're competing in public sector banks.
Yeah. So, Avinash, competition is public sector banks.
As of now, we have taken the call of 25 basis point cut across the board. As of right now, we are not contemplating any further cuts, let's wait and watch. There is not too much of an impact on our, let me say, BT. The BT, yes, they have gone up slightly, but the increase is not significant for us to get into panic mode and start cutting immediately. Right now, wait and watch. We are waiting and watching. BT is at manageable levels. I think we need to watch what happens over a period of time. If required, I'm not saying no. If required, yes, we may be required to cut again. I think we would try to manage our portfolio within the existing levels of risk of cuts, whatever we have done.
Avinash, we are also hopeful that in the coming quarters, our cost of borrowing will further come down by 5 bps- 10 bps. Our fresh loan rates start from 7.50% onward. It is in line with the other PSU banks.
Okay. Thank you, sir. Thank you.
Thank you. We have our next question from the line of Rushabh Sheth from Parma Capital Advisors. Please go ahead.
Hi. No, my questions are answered. Thank you so much.
Thank you. Thank you
.
Thank you. We have a next question from the line of Vansh S olanki from RSPN Ventures. Please go ahead.
Hello. Good morning, sir. I have a question on project finance growth. As we see in the dip graph, it is quite muted. Is LIC Housing Finance going to grow the project finance or what? How is the management seeing growth in that sector? If we see the overall growth, it is almost stable, same as Q1 of 2024. There is no growth, as you can say. What are the in market and what do you say about this?
Yeah, Vansh. Yeah. It is not that we are withdrawing from the project finance market or the construction finance market. We are there. We are there. Yes, we are slow because we want to finance only reputed and builders with a degree. Our past history, as you all know, in the project finance space has not been great. There was a point when 54% of the construction finance book was NPA. We have recovered from that, learned our lesson, and we are going slow. We are definitely there in the project finance market and we want to grow our books. As to why the project finance disbursement was low in the quarter, if you understand project finance, the disbursements are not like retail loans where you sanction a loan and immediately the loan gets taken off. The project finance are there.
We have sanctioned about INR 800 crore of project finance in Q1 of this current year, but the disbursements are linked to stages of construction, right? Over a period of time, as the project starts getting constructed, the disbursements will happen. I'm not worried. Yes, INR 156 crore of disbursement as against, what, INR 521 crore does appear to be some kind of a shocking kind of downfall. It is not worrying. It is not worrying at all. We are into the project finance book. We are assessing, appraising loans to credible and, if at least it could be recurrent builders. We are hopeful for recovery in this. Already INR 800 crore, as I told you, this would be disbursed as and when the construction happens. There are various other loans, finance which we are assessing at the moment. They disbursed in the current quarter.
Uptake would happen in the probably some uptake in the current quarter and some in the quarter three.
Okay. The second question is on my liquidity. Is there any extra liquidity at the end of Q1?
Our liquidity, no, I think we don't have any such liquidity because our borrowings are exactly linked to what we need or what our requirements are. Maintaining liquidity would be the cost. We are very calculated as far as how much we need to borrow, and that is linked to our internal approvals as well, the kind of disbursements we expect to make over a period of.
Overall, the liquidity in the system, we see, that is, as I said in my opening remarks, the liquidity in the system is there. The RBI, the steps taken by the RBI have improved liquidity in the system. There is no constraint or any difficulty in raising loans and advances from the markets. Funds are available, as I call it. The only question is, at what rates they are available because we are negotiating whatever benefits we can get, as has been witnessed by our... We want it to come down, to come down further. As far as... we are seeing a good ratio. For example, very recently, we borrowed INR 2,000 crore at 6.75%, whereas our overall borrowing cost is at 7.50%. The incremental borrowing cost for the quarter is at 7.50%. Hopefully, going forward with liquidity in the system, our borrowing cost will...
I want to add something. As you said that it is a risk market, ample liquidity is there. We are getting benefited. As you know, our cost of borrowing, especially incremental cost of borrowing, has come down below 7%. That is, as of now, as on June 30, it has come down to 6.97% only. We are hopeful that in the next three quarters, it will further go down by 5 bps-10 bps.
Okay. The last question is in my GNPA and NNPA. If I go by the numbers, exit numbers, it is approximately INR 400 to 500 crore increase in the GNPA, if I'm right. Our NNPA, I mean, the provisioning is increased by INR 150 or 200 crores only. Is there another increase in GNPA just for technical write-off or just because, like, was it because of one, two days, or one week, there is a customer isn't paying just for bookkeeping, it went into GNPA number because of that? How much recovery, I mean, management is expecting for throughout the year if you have all the number in your mind?
No, sure. You know, our asset quality is improving gradually if you compare with the Q1 last year. The Q1 same of a gross NPA was INR 9,500 crore. If you compare with that figure, it has now INR 8,115 only. Our asset quality is 2.62%. If you compare with the previous year, the corresponding quarter, it was 3.30%. We are operating in the line of in the correct way. Our asset quality is improving gradually.
Yes, my question was if the gross GNPA is increased more than net NNPA. The difference between the both are just because of a bookkeeping, because customers didn't pay for 7, 8 days and then it repays. Just for a bookkeeping of for the 90-day period, it came into gross NPA number on the quarter one end. That was my question, actually.
NPA ratio, yes, it has gone up. If you look quarter to quarter, it was 2.47% at the end of Q4. Right now, it is 2.62%. Year- on- year, of course, there is an improvement. Partially because, yes, in Q1, I would say the NPA, the third three-years, has gone up by INR 514 crore. Yes, we have witnessed some pressure on collections. Delinquencies in the retail, I would say, have been slightly more. This has also been contributed by, I would say, a movement of personnel or resources because the month of May for LICHFL is a month of promotion and transfer. There's a lot of movement of personnel from place to place and from vertical to vertical, probably because of that. I am not worried. Usually, Q1, this is a trend year after year. Q1 is slightly slow.
We do tend to recover in Q2, Q3, Q4. I am sure that our asset quality will improve further going forward. There should not be any such problems. Our PCR continues to be in that 50%, 51% bracket. Adequate provisions are in place. There's nothing to worry as far as the NPA front or the stage 3 competition. A write-off of INR 30 crore was done in the quarter. It is not that we have significantly written off a big amount. We have INR 30 crore in the current quarter.
Okay. Okay. That's all from me. Thank you, sir, and all the best.
Thank you. We have our next question from the line of Kunal Shah from Citigroup. Please go ahead.
Yeah. Hi, sir. Firstly, maybe you indicated not too much of pressure on balance transfer at this moment. Generally, in the past, we have seen that LIC Housing Finance wherein it comes in one quarter, wherein there is a lot of repricing pressure. We will set the rates lower and then it'll come off and decline in one single quarter. How are we protecting ourselves against that kind of a risk? I think which way competition is huge and we will see the pressure. We have just cut the PLR by 25 basis points here.
Yeah, Kunal, yeah. Answering your question. As I said, right now, we are not witnessing too much of a pressure. I would say we are not witnessing any abnormal pressure. Yes, historically, you are right that BTs have been sort of higher for LICHFL . I think there is more business moving out than moving in in the form of BTs. The current trends, they continue to be at those same levels and are not alarming at all. What we have done, yes, we have made a provision called rewriting of interest rates available to our customers. Any customer currently, say, probably at 9%, 9.5% can rewrite his loan at 8.75% if he wants. We have made that facility available to the borrowers. Many of the borrowers are opting for that rather than transferring their loan. They are opting for rewriting.
The other part of it is, yes, there will be, because of the intense competition and the banks lending into the repo, there will be pressure on us. We are aware of that. We have our teams in place. Our teams are monitoring every BT and trying to convince the customers to stay with us for various reasons. We are offering them additional loans, etc., etc., etc. Since the market is so competitive, it is all at the end of it, it is going to be a big game of margins versus growth, right? We as a company, we need to take a call as to whether we really need to grow the book at almost minimal or no spreads or we need to protect our margins.
What I personally see, given a push and a shove and if our backs are to the wall, I would prefer to protect margins rather than look at growth. That is what the strategy is on the moment.
If I were to assume that then growth will also maybe continue to be very modest. In fact, a few quarters back, we have been indicating we would want to get towards double digits. Given maybe the focus on margins and this kind of a competition with banks being very aggressive, should one settle with maybe 7%, 8% growth for you?
At the moment, Kunal, honestly, I am not indicating that. I'm not guiding towards that. We would like to wait and watch in the second quarter what happens, what is happening. Then probably take a call. Maybe in the analyst call of Q2, I would be able to give you a better idea of what we are looking at, what numbers we are looking at growth. I'm very clear in my mind that if at all it comes to choosing between growth and margins, I would choose margins.
Okay. Got it. Last one on the overall yield breakup. You mentioned incremental yields are 8.9%. If you can just highlight in terms of how the incremental yields have been in home loan and less. Yeah.
I think, Kunal, I'm sorry, I don't have the breakup on home loans and projects, etc. Overall, I have this. I gave you 8.9 against 9.4 in Q4 of last year.
Got it. Okay. Yeah. No worries. Thank you.
Thank you.
We have our next question from the line of Abhijit Tibrewal from Motilal Oswal Financial Services. Please go ahead.
Good afternoon, sir. Thank you for taking my question. For the benefit of everyone just trying to understand, if you took your first PLR cut of 25 basis points effective April 1, and then did you share that you've taken a second 25 basis points rate cut effective July 1? Is your understanding correct?
As I said, we have taken only one rate cut across about 25 basis points. It was on 28th of April. Since our book, one-third of the loans are on monthly reset. Immediately on 28th of April, when we took it, the rates for these one-third loans got cut on the 1st of May. 28th April was the date when the cut was taken. From 1st of May, one-third of my book got reset. The other two-thirds of my book is on quarterly reset. That got reset on the 1st of July. There has been only one rate cut of 25 basis points across the board.
Got it, sir. If you're speaking in terms of PLR, you've just taken one 25 basis points rate cut until now.
Yeah, that's correct.
Got it. Like you spelled out earlier, sir, during the course of the quarter, if need be, we might look at further PLR cut.
Obviously, I'm praying every day that we don't need to cut further. As I said, we'll take a call as the scenario unfolds in Q2.
Got it. Got it.
The other question I had was around the asset quality. I'm just trying to understand, right now, I mean, buying this quarter, we might want to call out the strategies that we saw as seasonal. You also alluded to the fact that, I mean, there are changes that happen at LIC Housing Finance in terms of people movement, promotions in the month of May, which typically leads to some disruptions. Sir, what I'm trying to understand here is within the different product segments that you have, are you seeing more space building up today in the LAP segment? Sir, why I ask is, of late, we've been hearing that there is space that is coming in the MSME segment, predominantly unsecured.
Is there a reason to believe that somewhere going forward, when people don't have enough money coming in from unsecured loans, they might gravitate towards this LAP product? Sir, to that extent, I mean, last one year, you'll also acknowledge the industry has seen very strong growth in loans against property. Are you also seeing now early signs of higher delinquencies in the LAP product? Sir, a related question, if you could also share your segment-wise growth statement that you share every quarter in the month.
As you know, because as I said, unfortunately, we don't have a big loans against property book. We are mostly into, like I said, 85% of our loans in the individual home loans segment. The loans against property segment would contribute about 12%- 13% of my book.
11%
11% of my book. There is not too much of a loans against property book. Whatever delinquencies we've noticed since Q1, my stage 3 EAD has gone up by INR 514 crore. Most of it has been in the retail and individual home loans segments. It has not significantly increased in the LAP or the LRD segment. Most of it is in the retail segments. Yes, I do agree there has been some pressure on collections in the retail segments. It has happened across the industry. My competitors mostly were into the LAP and the lease rental discounting business. Maybe they are witnessing, like banks are witnessing in the MSME segment, they are witnessing some pressures in the LAP book. No, our LAP book continues to perform as it is.
Our worry or concern is in the individual home loans book, where most of the delinquencies have taken place in Q1. As regards the number you're asking for, the stage 3 numbers for individual home loans, our stage 3 in IHL i s about 1.22%. The new EAD percent is 1.22%. The new EAD is INR 3,211 crore. What exactly, Abhijit, what are you looking for here? Do I give you the info?
Sir, you can give the EAD. Basically, every quarter in the earnings call, we show it segment-wise for IHL , NH I, NHC, non-housing individual, non-housing commercial, and project loans. The split, we typically give the EAD in every earnings call.
Okay. You can note it down. In IHL, the EAD is INR 3,211.32 crore and the EAD percentage is 1.2%. In NHC, housing in commercial and projects, it is INR 3,497.77 crore. The EAD percentage is 24.82%. In the NHI, it is INR 1,406.18 crore and the EAD percentage is 4.25%. In the overall ECL, it stands at INR 8,115.27 crore and the EAD percentage is 2.6%.
Got it, sir. This is useful. Thank you very much and I wish you a nice interview.
Thank you. Thank you.
Thank you, sir.
Thank you. We have our next question from the line of Rajiv Pathak from GeeCee Holdings. Please go ahead.
Good afternoon, sir. Sir, just two questions. One on the disbursement. Q1 generally tends to be soft. For the full year, what is the kind of disbursement growth that you are looking at?
Rajiv, if you recall in our con call for Q4, for the guidance for the year, we have given a double-digit growth as a guidance, right? Yes, it has been very, very muted. The growth has been on about, from year- on- year, it is 7%. Q1, Q2, it is about 4.5%. It is slightly muted. As I said in the beginning, that's muted instead of it being slightly low. Largely to do with the rate cuts and we being slightly slow in passing on the rate cuts, probably. That is my assessment now in hindsight. That was one. The other is, of course, the discouraged due to the movement of people from here and there. That also contributes to a muted Q1 in LIC Housing Finance. Right now, I'm not in a position to give you any guidance as I'm sticking to that double-digit growth guidance.
We'll wait and watch in Q2 how things unfold and how our growth picks up. I'm expecting growth to pick up in Q2. After Q2 ends, then maybe probably I'll have a relook at the guidance call of double-digit growth and come back to all of you and the markets with what I feel would be the growth guidance for LICHFL for the entire financial year. The coming festival season is coming up. This usually is a good season for all of us. Like in the past, we are hopeful of doing pretty well in the festival season.
Sure. Sir, can you tell us the monthly disbursement that you have done in April, May, and June?
April, May, and June. April, it was INR 3,265 crore. May, it was INR 4,580 crore. June, it was INR 5,125 crore.
Okay. Basically, if you were to derive, last year, I think we were at a monthly average of, say, INR 5,500 crore. Now that we are at INR 5,000 crore plus in June itself, maybe this Q2 being better should be stated to something like an INR 6,000 crore monthly disbursement average run rate. That would not be too far split, right?
It should go up there. July has been about INR 5,500 crore, right?
Okay.
It should be August onwards, we should be hitting INR 6,000, INR 6,500 crore every month. This will actually be a festival season. It will be higher. Festival season will be higher than that.
Rajiv, just compared to your earnings, you, that is completely retailed.
Okay. Yes, INR 156 crore only in the entire quarter.
Sure. What is your point, sir?
Sir, on the spread, I think since we had this benefit of cost of funding upfront in this quarter, while the repricing of the yield was slightly sooner backdated because of the one-third, two-third thing, we had the spread improvement. Going into the next quarter, when you'll have two-thirds of your loan book getting repriced, do you think that the benefit of the cost of funds will be sufficient enough to cushion you?
Yeah. Right now, as of June, our spread is 2.10%. I earlier told that our incremental cost of borrowing has come down by 69 basis points. In the coming quarters, we are expecting that it will further come down by 5 to 10 basis points. In a nutshell, what guidance we have already given, that is 2.6%- 2.80%, we'll definitely maintain that.
Okay. It means there's a possibility of just 210 being maintained or even go up if you have this benefit on the cost of funds.
Yeah.
Okay, thank you so much. We'll follow that.
Thank you. We have our next question from the line of Zhixuan Gao from Scan Stream Strategic Advisors. Please go ahead.
Hi. Thank you for the opportunity. To respond to your earlier comment that from all of us who want to BT out, we have no variable percentage allowing us to reprice at a lower rate. I just want to double-check. Did I hear you correctly that they can reprice 75 bp s lower if they're supposed to upswipe?
Yeah, Mr. Gao, it's something like this. Not all our borrowers are at very high levels of rate service. The borrowers trying to go out of our books, we are offering them this facility. This is available for everyone. It is not that this is a special facility available to only those who want to go out. This is available across the board to all borrowers. Any borrower who right now has a, I would say, a rate of interest, effective rate of interest of more than 8.75%, we are offering them a rewriting at 8.75%. That is one of the tools we are employing to retain existing borrowers who want to move out.
The other thing is that since they have been with us for some time and we are aware of the property, if required, if they insisted, we are offering them top-up loans and loan on their property to hold them back. These are some of the methods we are employing to retain customers rather than letting them go to competitors because of lower rates of interest being offered by the competitors.
Thank you, sir.
Our business transfer, as you were asking, is hardly 0.10% per month. Just looking to size of our book, I think more than INR 3 lakh crore, INR 3 lakh 9,000 crore. INR 1,000 crore in a quarter, so it is hardly 0.1% per month. That's all.
Thanks that is helpful, I'm so sorry. This new offering, when did it start that anyone above 8.75% can opt for 8.75% rate? When do we start this program? No, when do we start this?
It is already in go. We call it rewriting. Anybody who has on date having a rate of interest higher than 8.75% can approach us, pay a small amount of fees, and get his loan rewritten at 8.75%.
Got it. Thank you so much.
Thank you.
Thank you. We have our next question from the line of Chandrasekhar Sridhar from Idinity. Please go ahead.
Yeah, hi. I just don't know how much of the bank borrowings are pooling and how much of them have a cost of funds policy. Just trying to get a sense of how much of our entire 31% of our liability book has been refreshed with the second 50 basis point cut.
About 25% of total borrowing is easier up. In the current year, the remaining nine months, almost INR 22,000 crores of NCBs will be repriced. If you take it, bank borrowing plus repricing of NCBs, a total book of around 42.96% would be floating. The remaining 57% would be fixed.
Have you had a cost of funds pass-through on the entire INR 100 billion on the bank borrowing?
Yes, yes.
Right. Okay. That's, you're not going to get much of an additional benefit on the bank borrowing? Essentially, the delta is coming from the FTD side on a prospective basis.
The bank borrowing, it is already, we already got benefits. Incrementally, it has come down by almost 69 bps . What we are seeing is that it will further come down by 5 bps- 10 bp s. We are getting benefited on our existing borrowings from banks. The scenario of more liquidity in the market, we are getting benefited gradually.
Sorry, I think just how large is the TWO pool, and just any sense from how much recovery you expect during this year?
Sir, can you come again? I didn't get what you asked.
Just how large is your top-up loans pool today?
Can you elaborate?
Yeah, yeah. Return of pool, sir.
Sir, your return of pool and just any sense on any recoveries was broad estimations.
We already returned hardly INR 30 crore only in this quarter. No, no, no. I'm talking about the.
Yeah, total return was INR 4,000 crore.
4,000 crores.
Yeah.
Any sense on what we could recover sometime this year?
Many cases are in pipeline. We are expecting a good recovery in the coming quarter. This quarter, we already recovered INR 60 crore.
All right. Just last question. I think this last year is about eight, nine months back, started about an affordable housing, which was at 250 basis points higher. Maybe some color on where we are in that process, how large and what is today in this. I mean, it's so small, but in the overall context, maybe over a year or a couple of years, how large do you think that can become?
Chandra, right now, we just started it last year in September onwards, end of September onwards. It's still in the process of sort of we are in the process of building up the infrastructure and the capabilities right now. We are not very aggressive on that, taking it slow and steady because we do the risky segments. We do not want to sort of entangle ourselves in something which we would not like to see. We are very much into this segment. We realize this is a segment which has the growth potential and also the margin potential. We are going to get into it, but slowly and steadily as we sort of build up our infrastructure and efficiency. Right now, it's pretty slow. Yes, there is some traction going on month on month. Last year, for example, about INR 458 crore of business gaining from the affordable.
This year, not having a huge target or such, we would be happy with somewhere about INR 1,000 crore and a lot more buildup in the infrastructure and the capabilities.
Thank you.
Thank you. We have our next question from the line of Rahman from Sequent Investments. Please go ahead.
Hello, sir. Can you hear me?
Hey, Rahman. Good morning.
Good morning, sir. Sir, I just wanted to, it's more like a clarification. Can you, you said you're expecting double-digit growth during the year. Is it AUM growth or, the NIM growth?
You're talking about the disbursement, the book growth, as well as the disbursement growth.
Okay, that's it. Thank you.
Thank you. We have our next question from the line of Koteshwar Rao from an individual investor. Please go ahead.
Hi, sir. Good morning.
Yeah, good morning, Mr. Rao.
Sir, you are discussing the new home loan set 7.5% interest rate, right? How are you trying to reduce the home loan interest rate for the existing customers? In this year, they already reduced it by 1%, right? Do your customers have any target benefits? How can the existing home loan customers get the benefits from LICHFL ?
Yeah. Mr. Rao, it's something like this. Housing Finance Companies, our business is very simple. We borrow money from the market and give it to you, individual home loan buyers, right? Right now, my cost of borrowing is 7.50%. You give it to you at 7.25%. How is that possible? That is not going to be possible, right? We do a monthly analysis of what my cost of borrowing is, what my cost of lending is, how much spread is needed because it's not simple that I borrow at 7.5% and lend at 7.5% and 0. How do I manage my expenses and my overheads and various other things? Ours is linked to the PLR. The prime lending rate is what we call. We have cut it by 25 basis points for all customers. I do not know if you have not got it.
You can see your statement for the month of July. You may be the quarterly recheck customer. For you, it is applicable from the 1st of July. We have cut it by 25 basis points across the board. Going forward, depending on our cost of borrowing, we will take a fall. If there is a significant reduction in our cost of borrowings, we will definitely like to pass it on to our customers.
Okay, sir. In this case, I just asked one question. I tried to reach out to the Branch Manager and Regional Manager, and they don't have any enough info to facilitate the customer. I see some of your agents are referring to RBI rates instead of your own LPR rates, okay? It would be better if you discuss properly before disbursing the home loans to the customer. One more thing. If the same thing continues, definitely banks will get the coverage rate. Banks are offering the better ROA. Why do I need to invest in Housing Finance Companies like LIC ? In my case, I am the investor for LICHFL . I am also the customer for LIC Home Loan. I took home loan, but I didn't get any benefit in the ROA change.
You must have got a 25 basis point cut, Mr. Rao.
No, sir. Actually, I took home loan in May, and I didn't get anything. The bank manager also doesn't know when you guys are revising the ROA. I am in a dilemma.
No, no. If you bought it in May 2025, you would have got it at 7.5%.
No, sir. No. I got it at 8.1 according to my CRR.
At that time, 8 is the starting. At that time, 8 is the starting one. I got it at 8.1. They didn't prevent it to as per your changes. I hope you understand.
I never had an 8.1% rate. The rate of interest for individual home loan borrowers is dependent on the CIBIL score and other risk factors, right? Probably the rate was 8%. You got it at 8.1% because of CIBIL and other risk factors. The cut was on the 28th of April. You would have got the benefit of that. I do understand. Every customer wants that he should get it at 0% interest. I understand that. What you have to do is that.
Sorry to interrupt you, sir. May I please request you to use your executive?
Thank you.
Thank you. We have our next question from the line of Abhijit Tebrewal from Motilal Oswal Financial Services. Please go ahead.
Yeah. Thank you for a long-way follow-up. Sir, just want to understand one small thing. If you look at your reported yield, it was 9.79% as of March, which is reported as 9.6% as of June. My understanding is this is based on a period end, right? This number is as of March and as of June. First, is this understanding right? The other thing I was just trying to understand, sir, is that if you look at your PLR curve, you share that you've taken a 25 basis point cut where one-third of the customers are on monthly reset. This 19 basis point decline that we have seen in the yields, is it partly because of this 25 basis point rate cut and the remaining data coming from the newer origination which are happening at lower rates?
Is that understanding correct or how should we understand this 19 basis point decline?
Okay. Yeah. Because the cumulative 9.60% and 9.79% at the end of last quarter, this 19 basis point is on the cumulative yield on advances. Yes, definitely, the one-third cut, which we 25 basis point cut on one-third of our book, which came into effect from May 1, would have contributed to some of this. The others would have been at the incremental lendings which we have done in the current financial year at near about 7.5%.
Got it. Sir, because effective July 12, the remaining two-thirds of the customers will see a 25 basis point rate by year. That impact you will see in the second quarter results coming in.
Yes, I have it.
Got it. This is the clarification I needed. Thank you so much.
Thank you. As there are no further questions from the participants, I now hand the content over to the management for closing comments.
Yeah. Thank you, friends. I believe we've been able to clarify most of your queries and your questions. As I said, Q1 has been quite sluggish for us. Of course, traditionally, it is a slow quarter for LICHFL . As in the past, we have shown traction and growth moving into quarters 2, 3, and 4. This is what we are expecting in the current year. A slightly different market in the current financial year because of the rate cuts. Yes, the companies are under pressure, as Mr. Koteshwar Rao and individual investors alluded. Customers want the benefits of the entire rate cuts to be passed on. In some cases, it's not possible. Like companies like HFL because we have to do business. We are a company. We have to borrow and lend. It depends on borrowing rates.
Looking forward, we expect everything to pick up. The growth momentum to pick up. The activity in the markets to pick up. I do understand competition also will pick up because banks are very, very, very aggressive. A 36-year-old company, I think we are poised to take on the markets, poised to take on the competition, and do ourselves is do well for us. Q2 is going to be a defining quarter for all of us. That will set the course for the financial year. Looking forward to meeting you all at the Q2 conference call and sort of explaining our performance as well as our way forward. Thank you all for your support.
Thank you. On behalf of Axis Capital, that concludes this conference. Thank you for joining us. You may now be turning to.