LIC Housing Finance to bank on affordable loans for credit growth, margins

Mumbai: LIC Housing Finance has decided to focus on the affordable housing segment as it looks to accelerate loan growth and achieve better margins, a senior executive said on Monday.

So far, the mortgage lender has been more comfortable lending to salaried customers and those with strong credit scores. Tribhuwan Adhikari, managing director and chief executive of LIC Housing Finance, told reporters that the lender has so far not been very aggressive in the affordable segment, but now expects a lot of demand for such loans. Home loans of up to ₹50 lakh are typically categorised as credit for affordable housing.

“At present, affordable housing is 8-10% of the portfolio. Two years down the line it could definitely be at least 20-25%,” Adhikari said.

As of 31 December, the company’s outstanding loans stood at ₹2.8 trillion (lakh crore), up 5% from the same period last year. Adhikari said that while 5% growth in the loan book may not look very good, the current financial year (FY24) has been a year of consolidation for LIC Housing Finance.

“Right at the beginning of the (financial) year, we went in for a major technology upgrade. We also conducted a major overhaul of our organisational structure. Then in August there was a change in leadership when I came in,” he said.

Adhikari added that owing to LIC Housing Finance’s bad loans and poor decisions in the past, the lender had decided to be cautious. Its stage-three loans or bad loans were at 4.26% of the loan book in Q3, down from 4.33% in the previous quarter.

Detailing the organisational changes, Adhikari said the lender shifted to a new lending platform after using the previous one for almost 13 years.

“[The old platform] was doing well but was slightly constrained in adapting to new technologies. As a company we realised that the way forward was going to be digital,” he said. He added, however, that the mortgage lender had a few performance issues with the new platform that took almost four months to stabilise. The other part of the restructuring, he said, was opening 44 cluster offices for credit appraisal.

“All these things are now over and in Q4 you will see a much better growth in the loan book. FY25 is going to be the year of delivery for LIC Housing Finance. We will go all guns blazing and have given a guidance of 15% loan book growth in FY25,” Adhikari said.