LIC Housing Finance beats Q3 profit view on improving asset quality

LIC Housing has seen an improvement in asset quality over the last few quarters, leading to lower funds being set aside for bad loans, which has aided its bottom line

LIC Housing Finance reported a bigger-than-expected third-quarter profit on Friday, helped by healthy asset quality.

The company said its profit after tax for the quarter ended December 31 rose 23 percent to Rs 1,432 crore ($165.4 million). Analysts had expected a profit of Rs 1,285 crore, according to data compiled by LSEG.

LIC Housing has seen an improvement in asset quality over the last few quarters, leading to lower funds being set aside for bad loans, which has aided its bottom line

Its stage 3 assets, or loans that are overdue for more than 90 days, declined to 2.75 percent for the quarter from 4.26 percent a year earlier.

The company also sold a stressed loan asset worth Rs 250 crore during the quarter, it said, which helped aid asset quality.

LIC Housing's loan disbursements grew a muted 2 percent to Rs 15,475 crore in the third quarter as the housing finance sector continues to see intense competition between home financiers and banks, especially in the premium segment.

The company's disbursements have been slower than its peers in last few quarters. Earlier this month, PNB Housing's reported a 30 percent rise in disbursements for the third quarter.

Its net interest income, the difference between interest earned and paid, fell around 5 percent to Rs 2,000 crore.

Net interest margin, a key gauge of profitability, shrunk slightly to 2.7 percent from 2.71 percent in the previous quarter against 3 percent a year earlier.