Expect 16-17% disbursement growth in FY16: LIC Housing

LIC Housing Finance posted a good set of second quarter earnings beating the street expectations for net interest income. The company’s net profit rose 20.7 percent to Rs 412 crore against Rs 341.3 crore in the same quarter last year. However, the profit growth was limited by higher provisions and tax expenses. Net interest income (NII) improved by 34.8 percent to Rs Rs 717 crore in the second quarter. NII is the difference between interest earned and interest expended.Project finance segment has shown good growth and will continue to be the company’s focus, Sunita Sharma, Managing Director (MD) & Chief Executive Officer (CEO), LIC Housing Finance told CNBC-TV18. Sharma expects a 16-17 percent disbursement growth in the current year. LIC Housing Finance will review the base rates in coming few days and will pass on the rate benefits to the customers soon, Sharma said. Rate cut might hit the margin growth in coming quarter, she added. However, the company will mostly close the year with stable margins.Here is interview transcript of Sunita Sharma with CNBC-TV18's Ritu Singh. Q: What were the profit drivers this quarter and what is your outlook going forward? A: The portfolio in loan against property (LAP) has increased from less than 3 percent to around 6 percent, which has given us margins, while we were doing this we were cautious but we kept growing in project finance also. Our portfolio is small but we have shown a good growth in project finance. As a result of that we have been able to show good profit and good margins.At the moment our focus has been on project finance but project finance has to be where good opportunity is there. We will not go blindly into any project finance. We will be careful. We have been careful but it doesn't mean that we are not going to do it. We are definitely going to do it because it is going to give us lot of margins.Q: Going forward what is the kind of growth you envisage in both these segments and do you hope to end the year at a similar level or much higher than 17 percent disbursement growth, even your margins have improved by 15 bps. Do you think that trajectory will continue? Can you close the year closer to 3 percent mark?A: I feel growth should continue at 16-17 percent. However, 17 percent is a good enough growth for us. We are thinking of taking a call on passing on the benefits of less borrowing cost to the customer. If that happens then margin expansion may not take place to that extent, maybe for one quarter, but in the next quarter things will happen and we expect similar kind of margins if not too much of growth in margins but it will be there. Q: In the margin growth, do you think there maybe some hit you will have to take when you pass on the benefit. How much benefit will you pass on to customer and what is the hit on margin you envisage?A: We have to take that call in next two-three days. We have not calculated. We have to calculate it and when we decide the amount, then only we can talk about the hit. We cannot talk before that. Q: You think in the next quarter the margins may trend lower because of that benefit?A: I am not saying that. I am saying that growth in margins may not be the same. I am not saying that it will go down. I am saying the growth may not be the same.