Investor Update March 2018
Property cost (rs lac) & Affordability Urban population (cr) Urbanization Rate % Indian housing industry: Strong growth drivers Rising population Growing urbanization Population(cr) Improvement in affordability Favorable tax legislations Section 80C IT Act Section 24, IT Act Section 54, IT Act Deduction on account of principal repayment of up to Rs.1.5 lakh on home loans from the borrowers gross total income Deduction on account of annual interest payment of up to Rs. 2 lakh on home loans, where the house is self-occupied. Capital gains from transfer of residential property, if invested is acquiring a residential house, exempt from income tax 1 Crore (cr)=10 million 2
Several initiatives to promote housing Real Estate Regulatory Authority RERA Bill in 2016: 24 out of 35 States & Union Territories have notified RERA Incentives for Builders in Affordable Housing-Union Budget 2016 Budget 2017: Infrastructure Status for Affordable Housing Budget 2018: Affordable Housing Fund to be created 3
Several initiatives to promote housing Housing For All by 2022 Launch of Pradhan Mantri Awas Yojana in 2015 100 Smart Cities notified Announcement of Interest Subsidy for Loans upto Rs 9 lacs & Rs12 lacs by Hon ble Prime Minister on 31.12.2016 (MIG-I & MIG-II) 4
UK USA Singapore Hong Kong Germany Malaysia Korea Thailand China India India (FY2020E) No. of cities Mortgages: Large scope for improving penetration Indian mortgage market is significantly under-penetrated Mortgage to GDP ratio, March fiscal year-ends, 1HFY18 Cities With population > 1m 70 65 63 56 42 28 14 51 45 41 34 31 20 18 10 12-14 0 Source: ICRA Indian Mortgage Finance Market Update for H1FY2018 Creating a Large Addressable Market 100% 80% 4.10% 6.80% 8.20% 8.50% 34.70% 30.10% 27.20% 26.40% Finance penet rat ion is low for housing finance in rural areas Finance penetration in urban and rural areas (housing finance), march fiscal year-ends, 2012-2017 (%) Urban penetration Rural penetration 50 60% 40% 20% 0% 61.20% 63% 64.70% 65% 2001 2006 2011E 2016E 40 41.2 41.5 42.2 42.7 43.2 39.0 30 20 8.2 8.4 8.4 8.9 9.0 9.2 10 Working Age(15-59 years) <15 Years >59 years 20-59 years <20 years 0 2012E 2013E 2014E 2015E 2016E 2017E Source: NBFC report 5
Mortgages: High growth trajectory Mortgage book to witness strong growth going ahead March fiscal year-ends, 2011-2019P (Rs tn) Mortgage loan book LHS) YoY (RHS) 30 20.9 24 19.2 17.0 18.5 17.7 15.0 14.6 18 (%) 25 20 16.7 15 12 6 7.4 8.6 10.4 12.4 14.7 17.3 19.9 22.8 26.6 10 5 0 Note: 2011 2012 2013 2014 2015 2016 2017E 2018P 2019P 1) Includes the overall portfolio of HFCs and only developer and housing loans of banks. 0 Source: NBFC report Housing loans to witness strong traction as impact of GST and RERA fade away March fiscal year-ends, 2012-2019P (Rs tn) 25 20 15 20.6 Housing finance (LHS) 19.0 18.6 18.1 YoY (RHS) 16.1 15.0 18.0 (%) 25 20 15 LAP market to pick pace post lowering in last two years March fiscal year-ends, 2013-2019P (Rs tn) LAP loan book (LHS) YoY (RHS) 5 4 3 34.4 30.1 28.8 (%) 35 28 21 10 5 0 19.6 16.6 14.4 12.4 10.5 6.2 7.5 8.9 2012 2013 2014 2015E 2016E 2017E 2018P 2019P 10 5 0 2 1 0 15.5 12.0 13.5 1.3 1.7 2.3 2.9 3.2 3.7 4.3 2013E 2014E 2015E 2016E 2017E 2018P 2019P 14 7 0 Source: NBFC report Source: NBFC report 6
Mortgages: HFCs play a key role HFCs continue to dominate mortgage market March fiscal year-ends. 2012-2019P (%) 100 Banks HFC HFC continue to dominate home loan market YoY increase in home loan portfolio of banks and HFCs Banks 30 26 HFC 80 34 37 37 38 38 40 40 41 60 40 66 63 63 62 62 60 60 59 20 0 2012 2013 2014 2015 2016 2017E 2018P 2019P Source: NBFC report 24 21 20 19 18 19 18 18 17 18 12 15 15 13 6 0 2013 2014 2015 2016 2017 1HFY18 Source: ICRA Indian Mortgage Finance Market Update for H1FY2018 7
HFCs: Home loans dominate mortgage book Home loans continue to dominate loan book of HFCs Portfolio composition of HFCs, March fiscal year-ends, 2017 (%) Construction finance, 10 LRD, 5 Others, 3 HFCs are growing their non-housing loan portfolio at a fast pace YoY increase in loans, March fiscal year-ends, 2014-1HFY18 (%) 35 28 Overall portfolio Home loans Other loans 26 26 27 30 25 23 21 21 21 LAP, 15 14 19 21 19 18 19 19 Home loan, 67 Source: CRA Indian Mortgage Finance Market Update for H1FY2018 7 20 22 21 20 23 0 2014 2015 2016 2017 1HFY18 Source: CRA Indian Mortgage Finance Market Update for H1FY2018 17 15 8
LICHFL: A Journey of 29 Years 1994 1989 2002 2004 2009 IPO Incorporated 2011 AAA Rating 2012 GDR Issue Crossed Rs. 1000 cr profit & Rs 75,000 Cr assets 2013 Best HFC by CNBC TV 18 Construction Industry Award Crossed Rs. 50,000 Cr loan portfolio Crossed Rs. 500 crs profit Best HFC by ABP News 2014 2015 Crosses Rs 1 lakh cr in portfolio Best Housing Finance Co. by BFSI Awards Best data quality in HFC by CIBIL 2016 Business Today- Best CEO Award Business World - Most Respected Co Award Outlook Money-Best HFC Best HFC by ABP News Best Data Quality by CIBIL Asia Pacific Entrepreneurship Award Power Brands Awards by Franchise India 2017 Crosses 150,000 cr in assets Outlook Money-Best HFC Business Today BFSI Best CEO NSE for highest Debt Issuance 9
LICHFL: Key highlights Highest ratings (AAA) since 2002 More than 22 lakh customers serviced till date Shareholding Pattern Total assets more than Rs 150,000 cr 96% of loan assets in retail category Cumulative Disbursements > Rs 2,60,000 cr since inception Gross NPAs in retail loans amongst lowest in Industry 10
LICHFL: Key highlights Disbursement (Rs. Cr) CAGR 14% Loan Portfolio (Rs.cr) CAGR 17% 50000 40000 30000 24359 25271 30327 36151 41541 20000 10000 0 2013 2014 2015 2016 2017 Income (Rs. cr) CAGR 16% Profit After Tax (Rs. cr) CAGR 17% 11
LICHFL: Key highlights Gross & Net NPAs Total Provisions* (Rs cr) Operating Expense to Total Income Profit per employee (Rs. lacs) * Provisions Including Provisions on Std. Assets & Teaser Loans 12
LICHFL: Key highlights EPS (Rs) (Rs 2/- pd up) Book Value (Rs)(Rs 2/- pd up) Return on Avg Equity Return on Avg Loan Assets 13
Trends in retail disbursements (Rs cr) Disbursements (LHS) YoY (RHS) (%) (Rs lacs) Average ticket size (LHS) YoY (RHS) (%) 45,000 21.51 20.45 22.98 25 25 10.34 12.5 36,000 18.03 20 20 10.0 27,000 18,000 11.02 15 10 15 10 7.03 5.06 7.32 7.5 5.0 9,000 4.56 5 5 2.5-23,230 24,289 29,255 34,529 38,334 29,976 2013 2014 2015 2016 2017 9MFY18 0-16.08 17.21 18.08 19.95 21.41 21.32 2013 2014 2015 2016 2017 9MFY18 0.0 100 (%) Share of home loans 80 60 40 20-96 96 92 79 77 82 2013 2014 2015 2016 2017 9MFY18 14
Low NPLs in retail segment over the years 1,000 (Rs cr) Retail GNPA (LHS) Retail GNPA ratio (RHS) (%) 1.0 800 0.8 600 0.47 0.6 400 200 0.32 0.27 0.24 0.2 0.2 0.4 0.2-239 240 253 246 284 710 2013 2014 2015 2016 2017 9MFY18 0.0 Amongst the lowest GNPAs in the sector with Net Credit losses since inception less than 7 bps 15
Large geographic presence Mumbai Vashi Panjim Amritsar Ludhiana Ambala Bhatinda Hisar Patiala Karnal Hubli Bengaluru Mangalore Kannur Thrissur Erode Kozhikode Palghat Ernakulam Kottayam Thiruvananthapuram Kollam Jalandhar Bellary Tirupati Hosur Chennai Mysore Vellore Hassan Nagercoil Warangal Visakapatnam Hyderabad Rajahmundry Gulburga Vijayawada Kurnool Kakinada Anantapur Guntur Salem Coimbatore Shimla Chandigarh Dehradun Noida Meerut Haldwani Tiruchirapalli Pondicherry Thanjavur Madurai Tirumangalam Nellore Corporate office Regional offices Back offices Operating offices Gurgaon New Delhi Faridabad Ghaziabad Gangtok Bareilly Bikaner Siliguri Jaipur Agra Gorakhpur Jodhpur Kota Ajmer Lucknow Udaipur Malda Kanpur Patna Gwalior Varanasi Dhanbad Ahmedabad Behrampur Allahabad Ranchi Durgapur Gandhidham Bhopal Jamshedpur Kolkata Rajkot Vadodara Indore Jabalpur Rourkela Bilaspur Surat Jalgaon Nagpur Raipur Vapi Durg-Bhilai Cuttack Nallasopara Aurangabad Bhubaneshwar Nasik Kalyan Thane Jogeshwari Pune Kolhapur Satara Belgaum Jorhat Guwahati Silchar Year 9 Regional Offices 23 Back Offices 249 Marketing Offices Rep offices in Dubai & Kuwait Coverage of more than 450 centres 2095 Employees Widening footprint improved efficiencies No of Marketing Offices No of Back offices No of Regional Offices No of Employees Lon Portfolio Rs cr 2003 105-6 870 7772 2008 125 14 6 985 21936 2013 194 16 7 1446 77812 2018 249 23 9 2095 156176 * (Dec 2017) 23 New Marketing Offices proposed to be opened in FY 2019 16
Distribution Network HOME LOAN AGENTS (HLAs) (Agents of LIC) 249 Marketing Offices Total No of Agents > 12300: growth of over 20% y-o-y DIRECT SALES AGENTS (DSAs) (Small Firms/Companies etc) CUSTOMER RELATIONS ASSOCIATES (CRAs) (Individual Agents of the Company) 49 branches of LICHFL Financial Services (100% subsidiary of LICHFL) 17
Loan Book Composition 31.12.2017 O/s Portfolio Rs156176 cr 30.09.2017 O/s Portfolio Rs151417 cr 31.3.2017 O/s Portfolio Rs144534 cr 18
Individual Loans Portfolio Stats Pure Floating Rate Loans To Outstanding Portfolio As of FY16 47% As of FY17 70% As of Q2FY18 78% As of Q3FY18 76% Loan To Value Ratio On Incremental Sanctions For FY16 47% For FY17 45% For Q2FY18 45% For Q3FY18 44% Prepayment Lump Sum/ opening book For FY16 11.9% For FY17 10.9% As of Q2FY18 10.9% As of Q3FY18 10.9% Installment to Net Income Ratio On Incremental Sanctions For FY16 33.25% For FY17 32.12% For Q2FY18 30.28% For Q3FY18 30.74% 19
Origination Pattern & Average Ticket Size Data for 9M FY 2018 20
Financial Highlights Q3FY18 9M FY2018 9M FY 2017 Return on Average Equity (%) 17% 19% Return on Average Assets (%) 1.3% 1.5% Earnings per share (on Rs 2 pd up) 28.74 27.78 Capital Adequacy Ratio Tier I Tier II Total Sept 2017 13.36 2.68 16.04 Sept 2016 13.99 2.65 16.63 21
Executive Summary Q3/FY18 Q3 FY18 PAT at Rs 491.07 cr as against Rs 499.26 cr for Q3FY17 Q3 FY18 Revenue from operations up by 6 % to Rs 3738 cr Outstanding Loan portfolio up by 15% to Rs.156176 cr Individual Loan Portfolio up by 15% to Rs 149986 cr Q3FY18 Disbursements Rs 12301 cr against Rs 9685 cr up by 27 % Individual Loan Disbursements Rs 11323 cr against Rs 8555 cr, up by 32% Net Interest Income Rs 898 cr against Rs 915 cr Net Interest Margins 2.33% for Q3 FY18 as against 2.75% for Q3FY17 Gross NPAs at 0.87% as against 0.56% as on 31.12.2016 Net NPAs 0.49% as against 0.27% on corresponding dates Individual Loans Gross NPAs at 0.47% as against 0.32% on 31.12.2016 Total Provisions at Rs 1227 cr as against total Gross NPAs of Rs 1360 cr 22
Executive Summary Q3/9MFY18 Var Q3 FY18 Q3 FY17 Var 9M FY18 Rs cr 9M FY17 Interest Income on Individual Loans 4% 3525.78 3384.81 6% 10461.38 9905.04 Interest Income on Project Loans 46% 186.63 127.72 43% 517.88 362.12 Total 6% 3712.41 3512.53 7% 10979.26 10267.16 Processing Fees & Other Fees 67% 25.68 15.41 3% 79.45 76.90 Other Income 42% 29.48 20.79 8% 80.08 74.43 Gross Income 6% 3767.57 3548.73 7% 11138.79 10418.49 Interest Expenses 8% 2814.81 2597.15 8% 8281.60 7661.57 Net Interest Income (2%) 897.60 915.38 4% 2697.66 2605.59 Salary & Other Establishment Exp. 5% 147.73 140.70 2% 423.32 415.22 Net Provisions & Diminutions 7% 48.45 45.27 10% 210.74 192.03 Profit before Tax (1%) 756.58 765.60 3% 2223.13 2149.67 Income Tax Provision including Deferred Tax (1%) 265.51 266.34 3% 772.87 747.81 Net Profit (2%) 491.07 499.26 3% 1450.26 1401.86
Executive Summary Q3/9MFY18 Rs cr Var Q3 FY18 Q3 FY17 Var 9M FY18 9M FY17 Disbursements Individual 32% 11323 8555 23% 29976 24374 Project (13%) 978 1129 11% 2000 1975 Total 27% 12301 9684 21% 31976 26349 Outstanding Portfolio Individual 15% 149986 130878 Project 38% 6189 4488 Total 15% 156175 135366 Net Interest Margins(%) 2.33% 2.75% 2.39% 2.67% Borrowings during the Qtr 16430 13967 Incremental Cost/ytd 7.42% 8.19% Incremental Yield(overall, annualised YTD) 9.86% 10.69% Incremental Spreads (YTD) 2.44% 2.50%
Yield & Cost of Funds on portfolio 25
Liability Profile as on 31.12.2017 Source Wtd Avg Cost (%) Outstanding Borrowings Rs. 137629 cr Banks & Institutions 8.18% Non Convertible Debenture 8.41% National Housing Bank 8.20% Sub. Bonds & Upper Tier II 9.18% Commercial Paper 6.44% Deposits* 8.09% Total 8.32% During Q3FY18, Borrowings were Rs 16430 cr @ 7.38% * Includes Corporate Deposits of Rs 2749 cr 26
Change in Liability Mix Bank funding has reduced from 32% in FY12 to 25% in FY14. Retail Deposits increased to 2.2% Wtd. Avg. cost of Funds 8.32% 8.37% 8.50% 8.59% 9.14% 9.48% * Includes Corporate Deposits of Rs 2749 cr 27
Net Interest Margins 28
Gross & Net NPAs 31.12.2017 31.12.2016 Gross NPA (Rs. cr) 1360 759 Gross NPA (%) 0.87% 0.56% Provisions for NPA (Rs. cr)* 598 398 Net NPA(%) 0.49% 0.27% Provisions including standard asset provisions Provisions cover including standard asset provisions *Excluding provisions on standard assets 1227 969 90% 128% 29
Gross & Net NPAs 30
Thank you DISCLAIMER This presentation is made purely for information. We have attempted to provide relevant information which we believe will help in knowing the Company. The users may use their own judgment and are advised to make their own calculations before deciding on any matter based on the information given herein. While every care is taken to verify the accuracy of the information given in this presentation, neither the Company nor its officials would in any way be liable for any action taken or not taken by the viewers or the users of this presentation or for any claims, losses etc. 31