Aim to maintain NIMs, growth going forward: Repco Home Fin

In an interview to CNBC-TV18 R Varadarajan, managing director, Repco Home Finance spoke about the latest happenings in the company and the road ahead. He says the financing company aims to maintain net interest margins (NIMs) of 4 percent and above.

Additionally, Varadarajan is optimistic of achieving a ticket size of Rs 11 lakhs in FY14. Below is the edited transcript of Varadarajan’s interview to CNBC-TV18. Q: We have gone through an environment of very high cost of borrowing. So, could you tell us for your company per se what the cost of borrowing is and going forward what is your outlook on the net interest margins as well as on the yields? A:  We have been able to maintain our cost of borrowing around 9.3 percent as of now. Our rating also has improved a lot recently. So, we will be able to maintain this cost. We are always able to maintain spread of 3 percent and above and net interest margin (NIM) of 4 percent and above. So, we will be able to maintain in future also. Q: Can you improve it? A: We are able to maintain spread of 3 percent and above and net interest margin of 4 percent and above. We are having the outlook for the future also in the same way. Q: I want to ask you quickly with regard to your total business that you are eyeing for this particular year, it is around Rs 11,000 crore if I am not mistaken, how much have you all done and what is the outlook in the coming few months? A: What you are mentioning is about our parent bank. Repco Bank is aiming for Rs 11,000 crore. However, as far as housing finance company Repco Home Finance is concerned we have reached a level of Rs 4035 crore as of September. We had a growth rate of 30 percent over the previous last half year and we will be able to maintain the same growth rate in the future also. That is our endeavor though I am not able to give you any guidance on it but we expect the same type of growth in the future. Q: So, close to about a 30 percent growth on your loan book right? A: Yes. Q: Also, the average ticket size for the home finance business has slowly been inching higher. In FY10 it was about Rs 0.7 million and now you have managed to get it to Rs 1 million or Rs 10 lakh. In FY14 or FY15 what is your expectation of what the average ticket size will be? A: Our focus will continue to be on the low cost housing. So, the ticket size increase if you see it commensurates with the cost of the housing now. Therefore, it may not go very high. It may probably end up at around Rs 11 lakhs.