If approved, see rights issue in Jan/Feb: Can Fin Homes

Q: What was your overall performance in the quarter gone by? What would your guidance be considering it was quite healthy, your NII growth was over 25 percent plus you had your gross non-performing loans (NPLs) maintained for the quarter gone by as well?

A: Our loan book size is growing at 44 percent and our bottomline is growing around 20-25 percent via net interest income (NII). Our NII has posted a healthy growth basically we started reducing the cost of borrowing and increasing our lending mix with non-housing loans. Therefore, over a period of time if you could see that during the last two quarters 25 percent of our incremental advance is through, non housing loans like mainly propelled by loan against properties. However, with advance yield increasing and reducing the cost because we got AAA rating which has helped us in reducing our cost of borrowing in non-convertible debenture (NCD) and commercial paper market. So, in the quarters to come we will be increasing our NII more.

Q: In the month of October, you have filed the papers for 300 crore rights issue. When is that likely to be completed?

A: As per SEBI guideline, I am not suppose to talk about futuristic statement. We have filed with SEBI, they have asked for some clarifications. We have provided some clarifications. We are expecting their approval. Once that approval comes then we will go to the market somewhere during January or February subject to the approval from SEBI.

Q: You did net interest margins of 2.4 percent in the previous quarter and that’s been very stable for you. What is your guidance on the same? Do you expect it to improve?

A: It’s likely to improve in the days to come because our bottomline is shoring up. Initially when we had opened lot of branches and from 83 branches in September ‘13, so 106 branches, initially these branches were adding some pressure on the expenditure but since all of our branches are reaching breakeven within eight-nine months, these figures are bound to increase in the coming times. However, with the reduction in the borrowing cost and increase in advance rate we are hopeful.

Q: Asset quality has not been a problem for Can Fin Homes, your gross NPAs are practically non-existent. Any pressure that you faced in this quarter on asset quality or can we continue to expect zero pressure on the asset quality?

A: We will maintain the gross NPA .25 but incidentally we would like to add, we are striving hard to reduce it still further and our asset quality and we have strengthened our follow-up mechanism, in fact our branch managers, everybody has given an extra sensitisation on this subject because Can Fin Homes means asset quality is the number one strength which we will maintain in future also because we are ahead of other in the industry. We will maintain the number one position in the future also. I do not see any pressure.

Q: In your total loan book growth, you had 45 percent loan book growth in the previous quarter. How much now comprises of financing homes as well as non-finance as well as loans to non-home finance. Can you give us a sense and what would the mix look like going forward?

A: For this half year, we have increased our book size to Rs 1,200 crore out of Rs 1,200 crore Rs 300 crore is the non-housing loan – that is 25 percent of our incremental increase in our loan book size, which is towards non-housing loans and non-housing loans – basically, it is loan against property (LAP) and construction of commercial properties and we are not increasing our exposure to the builder loan.