Helped in good measure by reversal in provisions, LIC Housing Finance Ltd has reported a 43 per cent increase in net profit at Rs 306 crore in October-December 2011, against Rs 213 crore in the corresponding year-ago period.

With the housing finance company aligning its provisioning policy on standard assets/ bad loans, to match with the revised norms prescribed by National Housing Bank (the housing finance regulator), LICHF has reversed the excess provision of Rs 79 crore in the reporting period.

While income from operations increased 32 per cent to Rs 1,539 crore (Rs 1,161 crore), ‘other income' dipped sharply by 97 per cent to Rs 4 crore (Rs 141 crore).

Explaining the reason for the drop in other income, Mr V. K. Sharma, Director and Chief Executive, LIC HF, said in the October-December 2010 period his company had recorded a one-time gain due to sale of a portion of its stake in LIC Mutual Fund to Nomura. During this period, LIC HF also received the proceeds from the sale of its stake in a Kotak Group promoted venture capital fund.

“This year, we don't have one-time gains,” said Mr Sharma.

Loan disbursals

In the third quarter, the company sanctioned and disbursed loans worth Rs 6,009 crore (Rs 5,302 crore) and Rs 4,568 crore (Rs 4,215 crore) respectively Disbursements in the developer loan segment were lower at Rs 154 crore against Rs 411 crore for the corresponding period in the previous year.

Net interest margin (interest income less interest expense divided by average earning assets) declined to 2.27 per cent in the quarter ended December 31, 2011, against 3.14 per cent in the corresponding year-ago period.

Mr Sharma attributed the fall in NIM to his company going slow on high yielding developer loans and rising cost of liabilities.

Interest rates, housing scenario

Despite rising property prices, there was good demand from home loans in Tier-II cities such as Patna, Bhubaneshwar, Vishakhapatnam, Vijayawada, and Coimbatore, said the LIC HF chief.

However, the Mumbai property market continues to remain static with developers not coming up with worthwhile projects. The Delhi and Bangalore markets are beginning to look up.

LIC HF expects its outstanding loan portfolio to grow to Rs 63,000 crore by March-end 2012.

Preference Issue

The housing finance company has not yet firmed up a decision on further issue of equity shares through preferential allotment and/or qualified institutional placement, said Mr Sharma.

Shares of LIC HF closed 2.23 per cent lower at Rs 246.05 on the BSE, against the previous close of Rs 251.65.

>kram@thehindu.co.in

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