LIC Housing Finance Q1 - Slippages From Restructured Pool To Keep Credit Costs Elevated: Motilal Oswal
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Motilal Oswal Report
LIC Housing Finance Ltd. reported a profit after tax of Rs 9.25 billion (~18% beat), up five times YoY, but down 17% QoQ, led by contained opex and lower than estimated credit costs of Rs 3.1 billion (our estimate: Rs 4.5 billion).
LIC Housing Finance's asset quality exhibited deterioration, with gross stage-III/net stage-III increasing by ~30 basis points QoQ each to 5%/3%. The ~90 bps increase in GS2 was predominantly attributed to reclassification of restructured loans on actual days past due basis.
This was accompanied by an increase in Covid-related provisions to Rs 6.2 billion.
Reported yields declined by ~30 bps QoQ as of June 2022. Net interest margin fell ~10 bps QoQ to ~2.55% in Q1FY23. Core spreads also declined by ~12 bps QoQ to 1.8%, driven by lower yields, even as cost of fund remained stable sequentially.
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