Icra sees HFCs’ asset quality stress rising
Rating agency ICRA recently said that some stress might be seen in the asset quality of housing finance companies (HFCs) in the current fiscal, ending March 31. This is due to their push on riskier segments like lending against property and to self-employed people.
The total housing credit outstanding as of December 2013 is being estimated as at over R8.6 lakh crore against R7.5 lakh crore as of March 2013. ICRA, further said that with some focus of some of the HFCs on more riskier products like loans against property and builder loans, and/or leaning more towards the self-employed segment, it is not unlikely to see some stress on their asset quality numbers as the income streams can be more volatile in these cases.
It, however, also noted that so far HFCs have been able to maintain a healthy gross nonperforming assets ratio at 0.84%.
Icra also said a stable performance will be delivered by the mortgage finance industry as a whole going forward, saying it clipped at a healthy 18% growth in assets during the first nine months of the outgoing fiscal. Commenting about their profitability, Icra further said that the HFCs witnessed a compression in their spreads because of a narrowing of yields.
Agency’s senior vice president, Vibha Batra is of the view that the yields have been largely impacted because of the incremental growth that is coming from home loans at finer spreads, and lately, there has been lower disbursements to relatively higher yielding non-housing segments like builder loans.
Source: Financial Express
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