LIC Housing Finance Ltd. (LIC HFL) expects 15 per cent y-o-y loan growth in FY25, with an increased focus on growing loans in the affordable housing segment.

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Tribhuwan Adhikari, Managing Director and Chief Executive Officer, attributed the modest 5 per cent y-o-y growth in outstanding loan portfolios in the third quarter to the company being in a consolidation mode, including major organisation revamps and technology upgrades.

The outstanding loan portfolio of India’s largest housing finance company was up 5 per cent y-o-y and stood at ₹2,81,206 crore as of December 2023, against ₹2,68,444 crore as of December-end 2022.

Within the overall loan portfolio, individual loans increased 6 per cent y-o-y to ₹2,72,637 crore, and project loans declined 21 per cent y-o-y to ₹8,569 crore.

In the reporting quarter, total disbursements declined 6 per cent y-o-y to ₹15,184 crore (₹16,100 crore in Q3FY23). Out of the four segments in which the company gives loans, there was a decline in disbursements in three segments.

Disbursement in the individual home loan and project loan segments was down 5 per cent y-o-y (at ₹12,868 crore) and 12 per cent y-o-y (at ₹375 crore), respectively.

Non-housing individual loan disbursement was down 12 per cent y-o-y at ₹1,726 crore, whereas non-housing commercial loan disbursement rose 76 per cent y-o-y to ₹215 crore.

Adhikari said affordable home loans, a segment where the company has not been aggressive so far, will pick up steam in the next two years, with this portfolio expected to grow from the current 8-10 per cent of LIC HFL’s overall loans to 20-25 per cent. There is tremendous demand for affordable home loans, he added.

According to CRISIL, India’s mortgage market is divided into two segments by the ticket size of the housing loan at the time of disbursement: loans with a ticket size of more than ₹ 15 lakh and loans with a ticket size of ₹15 lakh and below. The former can be called the normal mortgage market, which is prominent in the metro and urban areas, and the latter, which generally includes houses on the outskirts of these areas and semi-urban and rural areas, can be defined as an affordable housing market.

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The LIC HFL chief said about ₹2,000 crore worth of loans in the project loan portfolio are non-performing. The company has initiated measures, including a legal route, negotiation with the borrower, and a one-time settlement.

LIC HFL reported a 142 per cent y-o-y jump in Q3 FY24 at ₹1,163 crore against ₹480 crore in the year-ago period.