Disbursement to grow 30% despite rate hike: Dewan Housing

Prashant Chaturvedi, head finance at Dewan Housing, in an interview to CNBC-TV18, spoke about the latest happenings in the company and the road ahead.

Below is the edited transcript of the interview. Also watch the accompanying video. Q: What is the sense in the financial community? Do you think asset quality is to deteriorate because the interest rate pressures on your accounts could worsen from here or do you think there is still time before accounts start turning back? A: We have seen a series of interest rate hikes in the last six-eight months and eventually industry and Dewan Housing Financial Corporation, in particular, have been able to pass on that kind of interest rate hike by various banks and the lenders on to the customers. So, net interest margin and the quality of asset have been maintained very well by the financial sector. If there is going to be no interest rate hike of 50-75 bps by the RBI in next two-three months, then it will put pressure on the quality of existing loan book of the financial sector. However, we feel that there will be some kind of balancing between quality and the net interest margin of the company. So, we will decide and do some kind of analyses before we pass on the interest rate hike on to the customers and some kind of balancing between net interest margins in the quality. So if there is a reduction in net interest margin by 10 bps, then we prefer that rather than taking any dent on the quality of the portfolio. Q: What should we assume now by way of a net interest margin for the rest of the year? Will it stay at that 2.85% that you reported in the first quarter or will you see it dip a little given the pressures? A: We have some kind of cushion to pass on another 50 bps hike on to the customers going forward. We think that another 25 bps hike by RBI is on the cards, which may happen in this month or maybe at a later date, A hike of 25 bps hike can be digested very well by the company and we believe that we should be maintaining net interest margins in the range of 2.8 to 2.95% for the full year.
Q: What about sanctions and disbursements. Your disbursements were decent but sanctions slipped to 17%. Will you see disbursements slowing down a bit from 20% given the poor appetite for real estate? A: We have been slightly conservative since April, we have been growing with over 40% kind of CAGR in our disbursement for last three and half-four years. But this year, the projection is to grow at 30% and not 45% or 50% in the company and that