Housing Loan: Loan Portfolio of Housing Finance Players Expected to Grow 8-10% in FY22: Report

According to a report, housing finance companies are expected to see portfolio growth of 8-10% in the current fiscal year and 9-11% in fiscal year 2022-23. After an impact on their disbursements in the first quarter of fiscal 2022, the non-bank financial corporations-housing finance companies (NBFC-HFCs) saw a strong recovery in the second quarter. Their on-book portfolio is estimated at Rs 11.6 lakh crore, up 9% year-on-year, in the first half of FY2022.

Going forward, the growth trend is expected to continue, driven by healthy demand in the industry, increasing level of economic activity and increased vaccination in the country, Icra Ratings said in the report released Wednesday.

“We are maintaining our estimate of 8-10% growth for the HFC on-books portfolio in fiscal 2022. Additionally, the HFC-on-books portfolio is expected to grow 9-11% in FY2022. fiscal year 2023,” the agency’s vice president and industry said. Head (Financial Sector Ratings) Sachin Sachdeva said.

In terms of gross NPAs (GNPAs), the second wave of infections and prolonged weakness in the operating environment challenged the recovery since the third quarter of fiscal 2021, resulting in lower l efficiency of collection (CE) and therefore a deterioration in measures of asset quality in the first quarter. FY2022, the agency said in a statement.

However, the industry saw a strong recovery in CE in the second quarter of FY2022 and (GNPA) was reduced by around 50 basis points (bps) in the same quarter.

Sachdeva said the reported GNPA ratio of HFCs is expected to increase to 3.6-3.8% as of March 31, 2022, from an earlier estimate of 3.3-3.6%.

Thereafter, some recovery is expected in fiscal 2023, with the GNPA ratio falling to 3.2-3.5% by March 31, 2023, he said.

The report said pressure on borrowers’ cash flow caused by the pandemic has also renewed demand for restructuring. The sector’s restructured portfolio outstanding has increased to approximately 2.3% of assets under management (AUM) as of September 30, 2021, from approximately 1.1% as of March 31 last year.

He expects the restructured portfolio to shrink slightly, due to reversals and slippages, to around 2-2.1% of assets under management by March 31, 2022.

On HFC profitability, Sachdeva said expected high credit costs should keep profitability moderate in fiscal 2022, similar to fiscal 2021.

However, it is expected to improve further in fiscal 2023, close to the pre-COVID level, Sachdeva added.

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