Housing finance companies to witness 8-10% surge in FY22
Real Estate

Housing finance companies to witness 8-10% surge in FY22

As per an ICRA report, Housing finance companies (HFCs) are expected to observe an increase of 8-10% in fiscal 2022, boosted by a surge in economic and higher demand.

On Monday, rating agency ICRA Ratings, in a report, said that in the first quarter of the current financial year, HFCs recorded no sequential increase in the on-book portfolio, as the second wave of Covid-19 affected their payments and collection efficiency (CE). The collection efficiency began bouncing back by the end of June 2021 and enhanced further in the second quarter of the fiscal year 2022.

In a report, the agency said that the strong demand in the industry, growing level of economic activity, and improving vaccination in the country is likely to result in a steady increase in disbursements and development in CE in FY22.

Its vice president and sector head (financial sector ratings) Sachin Sachdeva said that as of June 30, 2021, the overall on-book portfolio of HFCs in India is estimated at Rs 11 lakh crore with exposures across loans against property (LAP), home loans (HLs), construction finance (CF), and lease rental discounting (LRD).

The Covid-19-induced disruptions reduced the portfolio increase to 6% in FY21. But, despite no sequential increase in Q1 FY2022, the aforementioned favourable factors render hope for better increase prospects in FY2022 with an evaluated growth rate of 8-10%.

The report said that the HFCs asset quality metrics declined quite sharply in Q1 FY2022 due to the localised lockdowns inflicted by several states or union territories (UTs) on account of the second wave, which affected the borrowers' cash flows and thus the collection efficiency. The hike in overdue was the sharpest in the recent past, as borrower level liquidity got extended in the absence of loan moratorium, it said.

As of June 30, 2021, the gross non-performing assets (GNPAs) of HFCs rose to 3.6% from 2.9% as of March 31, 2021 (2.3% as of March 31, 2020). Though asset quality decreased across sectors, construction finance was the worst impacted followed by LAP and HL, the agency said. It anticipates a 40-70 basis points surge (net of recoveries and write-offs) in the GNPAs by March 31, 2022, from GNPAs as of March 31, 2021, considering there are no further Covid-19 induced lockdowns.

Notwithstanding the enhancement in business in the rest of FY22, the persisting asset quality pressures would keep the credit prices advanced and consequently, the profitability subdued in FY2022 for HFCs, Sachdeva said. He anticipates the pre-tax return on average managed assets for FY2022 to likely remain related to the financial year 2021 level (1.9-2%).

Image Source

Also read: Housing finance cos expect to regain pre-Covid momentum in H2FY22

As per an ICRA report, Housing finance companies (HFCs) are expected to observe an increase of 8-10% in fiscal 2022, boosted by a surge in economic and higher demand. On Monday, rating agency ICRA Ratings, in a report, said that in the first quarter of the current financial year, HFCs recorded no sequential increase in the on-book portfolio, as the second wave of Covid-19 affected their payments and collection efficiency (CE). The collection efficiency began bouncing back by the end of June 2021 and enhanced further in the second quarter of the fiscal year 2022. In a report, the agency said that the strong demand in the industry, growing level of economic activity, and improving vaccination in the country is likely to result in a steady increase in disbursements and development in CE in FY22. Its vice president and sector head (financial sector ratings) Sachin Sachdeva said that as of June 30, 2021, the overall on-book portfolio of HFCs in India is estimated at Rs 11 lakh crore with exposures across loans against property (LAP), home loans (HLs), construction finance (CF), and lease rental discounting (LRD). The Covid-19-induced disruptions reduced the portfolio increase to 6% in FY21. But, despite no sequential increase in Q1 FY2022, the aforementioned favourable factors render hope for better increase prospects in FY2022 with an evaluated growth rate of 8-10%. The report said that the HFCs asset quality metrics declined quite sharply in Q1 FY2022 due to the localised lockdowns inflicted by several states or union territories (UTs) on account of the second wave, which affected the borrowers' cash flows and thus the collection efficiency. The hike in overdue was the sharpest in the recent past, as borrower level liquidity got extended in the absence of loan moratorium, it said. As of June 30, 2021, the gross non-performing assets (GNPAs) of HFCs rose to 3.6% from 2.9% as of March 31, 2021 (2.3% as of March 31, 2020). Though asset quality decreased across sectors, construction finance was the worst impacted followed by LAP and HL, the agency said. It anticipates a 40-70 basis points surge (net of recoveries and write-offs) in the GNPAs by March 31, 2022, from GNPAs as of March 31, 2021, considering there are no further Covid-19 induced lockdowns. Notwithstanding the enhancement in business in the rest of FY22, the persisting asset quality pressures would keep the credit prices advanced and consequently, the profitability subdued in FY2022 for HFCs, Sachdeva said. He anticipates the pre-tax return on average managed assets for FY2022 to likely remain related to the financial year 2021 level (1.9-2%). Image Source Also read: Housing finance cos expect to regain pre-Covid momentum in H2FY22

Next Story
Infrastructure Urban

India To Invest $37 Billion To Boost Petrochemical Capacity

India is set to become a major global player in the petrochemicals industry, driven by a planned capital expenditure of $37 billion (Rs 3.1 trillion) aimed at reducing import dependency and enhancing self-sufficiency, according to S&P Global Ratings.In its latest report titled “First China, Now India: Self-Sufficiency Goals Will Add To Petrochemicals Supply”, S&P said India’s large-scale capacity expansion—mirroring China’s earlier push—will likely intensify oversupply pressures in Asia’s petrochemical markets.Currently the world’s third-largest petrochemical consumer a..

Next Story
Infrastructure Transport

Indian Railways Expands Global Exports Of Rail Equipment

Indian Railways has announced that it is rapidly emerging as a global exporter of railway equipment, including bogies, coaches, locomotives, and propulsion systems, under the government’s ‘Make in India, Make for the World’ initiative.According to an official statement, India’s railway products are now reaching over 16 international markets, reflecting the country’s growing capacity to design, develop, and deliver world-class rail solutions.Metro coaches have been exported to Australia and Canada; bogies to the United Kingdom, Saudi Arabia, France, and Australia; propulsion systems t..

Next Story
Infrastructure Transport

RailTel Awards Rs 163 Million Contract To RTNS Technology

RailTel Corporation of India Limited (RailTel), a Mini Ratna Public Sector Undertaking, has awarded a domestic work order worth Rs 163 million to RTNS Technology Private Limited.The contract, issued on 30 September 2025, involves the supply and installation of equipment and related services for one of RailTel’s key customers. The project underscores RailTel’s commitment to advancing technology and communication infrastructure through collaboration with domestic system integrators.RTNS Technology Private Limited, an ISO-certified system integrator, provides comprehensive solutions for perim..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?