LIC Housing Finance sees FY11 NIM steady at 3%

Housing lender LIC Housing Finance is confident of keeping margins around 3% in FY11 amid tight liquidity situation, a top official said on Wednesday.

"Our borrowing cost at present is 8.12%. We are getting competitive rates, much better than other companies. Banks have confidence in us," said VK Sharma, director and chief executive of LIC Housing told Reuters over telephone.

Earlier in the day LIC Housing Finance reported a 38% jump in net profit for the Oct-Dec quarter. The housing financier's net interest margin for the December quarter stood at 3.14%, up from 2.76%, a year ago.

A rise in borrowing costs will have some impact but the mortgage lender does not see margins falling below 3% in FY11, Sharma added.

The company said its retail loans jumped 90% to 53.02 billion rupees while disbursals rose 41% to 42.15 billion rupees in Oct-Dec.

The net interest income rose 55% to 3.52 billion rupees from 2.27 billion rupees, a year ago.

The company's total loan portfolio for quarter ended December stood at 463.80 billion rupees. About 10.5% of this was exposure to builders, Sharma said.

The firm expects to keep the exposure to builders at around 10-11%, Sharma said, adding gross non-performing assets on builder loan portfolio stood at 0.08%.

During the quarter the company's loans worth 3.89 billion rupees were under scrutiny of the Central Bureau of Investigation (CBI).

It's former chief executive officer, RR Nair, was arrested by the CBI for clearing loans worth 4.70 billion rupees for three realtors in a bribes-for-loan investigation. Sharma, who took charge from Nair in November, said the loans under scrutiny were being serviced, but he did not elaborate on the impact of the investigation.