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Edited Transcript of LICHSGFIN.NSE earnings conference call or presentation 5-Aug-19 9:00am GMT

Q1 2020 LIC Housing Finance Ltd Earnings Call

Mumbai Sep 13, 2019 (Thomson StreetEvents) -- Edited Transcript of LIC Housing Finance Ltd earnings conference call or presentation Monday, August 5, 2019 at 9:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Siddhartha Mohanty

LIC Housing Finance Limited - MD, CEO & Director

* Sudipto Sil

LIC Housing Finance Limited - CFO

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Conference Call Participants

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* Aakash Dattani

HDFC Securities Limited, Research Division - Research Analyst

* Abhijit Tibrewal

ICICI Securities Limited, Research Division - Research Analyst

* Adarsh Parasrampuria

Nomura Securities Co. Ltd., Research Division - Executive Director

* Bhaskar N. Basu

Jefferies LLC, Research Division - Equity Analyst

* Bunty Chawla

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Darpin Shah

HDFC Securities Limited, Research Division - Equity Analyst

* Dhaval Gada

DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials

* Digant Haria

Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research

* Hardik Shah

Max Life Insurance Company Limited - Chief Manager Investments

* Jignesh Shial

Emkay Global Financial Services Ltd., Research Division - Research Analyst

* Kunal Shah

Edelweiss Securities Ltd., Research Division - Associate Director

* Mohit Surana

CLSA Limited, Research Division - Research Analyst

* Mohit Mangal;CRISIL Limited

* Nilang Mehta

HSBC Global Asset Management (Hong Kong) Ltd. - Portfolio Manager

* Pranay Rajani

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Umang Shah

HSBC, Research Division - Analyst of Financials

* Vikash Mundhra

Axis Capital Limited, Research Division - Assistant VP of BFSI

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Presentation

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Vikash Mundhra, Axis Capital Limited, Research Division - Assistant VP of BFSI [1]

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Good morning, everybody, and welcome to the Q1 FY '20 Earnings Conference Call of LIC Housing Finance. Representing LIC Housing Finance, we have with us newly appointed Managing Director and CEO, Mr. Siddhartha Mohanty; and Mr. Sudipto Sil, Chief Financial Officer, to discuss the Q1 FY '20 results.

I now request Mr. Mohanty to take us through the key financial highlights for the quarter, post which we will have the Q&A session.

Over to you, sir.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [2]

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Good afternoon, and welcome to the post earning call of LIC Housing Finance Limited. As you would be knowing, LICHFL declared its Q1 FY '20 results on Saturday. This is my first interaction with the analysts and the investors as the MD and the CEO of LICHFL after having taken over on 1st August, 2019.

Revenue from operations, INR 4,757 crores as against INR 4,005 crores for the corresponding quarter of the previous year with a growth of 19%. Outstanding loan portfolio stands at INR 1,97,768 crores as against INR 1,69,866 crores as of 30th June of 2018, reflecting a growth of 16%, out of which individual loan portfolio stood at INR 1,84,155 crores as against INR 1,61,467 crores, up by 14%. Within the individual loan portfolio, home loan portfolio stood at INR 1,49,341 crores as against INR 1,32,901 crores, with a growth of 12.4%.

Net interest income stands at INR 1,154 crores as against INR 980 crores, up by 18%. Disbursements during the quarter were at INR 10,261 crores as against INR 9,594 crores for the same period in the previous year, a growth of 7%. Disbursements in the home loan segment clocked a growth of 8% during the quarter and stood at INR 7,871 crores. Disbursement in the project loan construction finance were lower at INR 829 crores as against INR 889 crores.

Net interest margins for this quarter were at 2.35% as against 2.32% for Q1 FY '19. Profit before tax clocked a growth of 7% to INR 840.89 crores from INR 788.40 crores. Profit after tax for the quarter stood at INR 610.68 crores as against INR 567.94 crores, a growth of 8%.

The environment during the first quarter of financial year 2019/'20 continued to be quite challenging in terms of overall demand and external factors. However, considering the situation, the company performed fairly on the business front, recording an overall disbursement of INR 10,261 crores, recording a growth of 7%. Company recorded a growth of 8% in the individual home loans from INR 7,260 crores to INR 7,871 crores. Amongst the regions, the Central, South Central, Southeastern and Western regions registered good growth.

On the affordable housing front, under PMAY CLSS scheme, the company continued to perform quite well. For the quarter under review, the company disbursed 10,073 accounts totaling INR 2,021 crores under these schemes, accounting for nearly 25% of the retail disbursement in volume terms and 21% in value terms and has received a subsidy of INR 219 crores for the beneficiaries. This will be our focus area for the current year. This year, we have opened 9 more marketing offices in Tier 2, Tier 3 cities like Shahdol, Guna, Guwahati, Chittoor, Jadcherla and others with a clear focus on affordable housing business.

This year's Union Budget has laid a lot of focus on affordable housing segment through announcement of several initiatives like additional deduction of 1.5 lakh on interest paid for homes -- home loans for properties up to 45 lakhs. We believe this is a very good initiative taken by the government towards its "Housing For All by 2022" program. As we are firmly entrenched in this segment, we are very confident of playing a leading role in this area.

Considering the overall market conditions, we have done lower disbursement in the project loans construction finance, which were INR 829 crores as against INR 889 crores.

On the portfolio growth front, the total portfolio recorded a stable and a consistent growth of 16%. Growth in the individual home loan segment clocked the multi-quarter high of 12.4%.

Pursuant to the introduction of Indian Accounting Standard, companies are required to report expected credit loss, ECL, on their loan assets and the provisions thereon. In terms of asset quality, there has been an increase in Stage 3 exposure at default, which has increased by 44 basis points from March 2019; that is 1.54% to 1.98%.

On the project loan construction finance portfolio, the increase was attributable mainly to a couple of accounts. We have adopted a multipronged strategy to address the NPA situation, including an account-by-account scrutiny at each level, including at the corporate office level. Legal action has also been initiated in these cases.

In most of these cases, the delinquency is due to slower sales, due to which installment payments are getting delayed resulting in transition from Stage 1 to Stage 2 and Stage 2 to Stage 3. However, we take minimum 1.5% security cover for construction finance. The value of underlying security is significantly higher than our loan exposure since many of the projects are complete, which gives us confidence of recovery. We are according the highest priority to this area across the company. The top 8 project loan NPA account, accounts for 65% of the total NPAs in project loan, and every effort is underway to resolve this.

On the cost of funds side, margins have remained largely stable year-on-year. We have witnessed a reduction in incremental cost of funds by 19 basis points from 8.46% to 8.24% (sic) [8.29%]. The net interest income growth has been nearly 18% higher than our portfolio growth. The funding environment and the liquidity conditions remain favorable. During the quarter under review, we have raised funds through NCDs, bank loans, NHB refinance and other instruments, including public deposits. Looking at the overall interest rate scenario, we expect some reduction in the incremental cost of funds.

With this brief introduction, I would like to invite your queries. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Mohit Mangal from CRISIL.

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Mohit Mangal;CRISIL Limited, [2]

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I have quite a couple of questions. The first is, can you tell about the incremental yield? And also, on your presentation, the Tier 1 and Tier 2s of March '19? So can you provide the data as of June 2019?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [3]

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Tier 1, Tier 2. The incremental yield 9.55% non-annualized. And the...

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Sudipto Sil, LIC Housing Finance Limited - CFO [4]

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Yes, incremental cost is 8.24%.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [5]

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8.24%.

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Mohit Mangal;CRISIL Limited, [6]

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8.24%.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [7]

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That's upon the -- yes.

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Sudipto Sil, LIC Housing Finance Limited - CFO [8]

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That is annualized.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [9]

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Annualized.

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Mohit Mangal;CRISIL Limited, [10]

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Okay. And regarding the Tier 1 and Tier 2?

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Sudipto Sil, LIC Housing Finance Limited - CFO [11]

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The Tier 1 and Tier 2, by and large, will be in the same range. We will publish it once it is approved by the regulator. It has to be first provided to the regulator. Only then, it will be placed on the presentation, but it will be, by and large, in the same levels.

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Mohit Mangal;CRISIL Limited, [12]

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All right. Sir, just the last one question regarding the provision, the overall provisions, including the standard assets, some figure on that?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [13]

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19...

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Sudipto Sil, LIC Housing Finance Limited - CFO [14]

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19...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [15]

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INR 1,919 crores total provision we have made, including provision for standard also.

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Operator [16]

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The next question is from the line of Pranay Rajani from B&K Securities.

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Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [17]

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Just a few data-keeping points. Can you please…

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Operator [18]

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Mr. Rajani, sorry to interrupt you. You are not audible. Can you please ensure you are audible?

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Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [19]

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Am I audible now?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [20]

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Yes, yes.

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Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [21]

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Yes. Sir, just a few data-keeping points. Can you please provide a gross NPA and net NPA numbers, also along with the bifurcation for individual and developer gross NPA percent?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [22]

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Actually, gross NPA, retail is 1.25% and the total is 1.98%.

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Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [23]

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Retail is?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [24]

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Retail is 1.25%, and the overall total NPA is 1.98%, including projects.

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Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [25]

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Okay. On just for the developer front?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [26]

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Developer, it will be 10% plus. It will be around 10.5%, 11%.

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Operator [27]

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(Operator Instructions) The next question is from the line of Hardik Shah from Max Life Insurance.

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [28]

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Sir, a couple of questions. What is the gearing for the current period? And what is the peak gearing you'd like to operate at?

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Sudipto Sil, LIC Housing Finance Limited - CFO [29]

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Yes. This is Sudipto, Hardik. The gearing as of now is around 10.5x right now and will probably remain at around -- I will -- at present, around ballpark this range.

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [30]

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Okay. And any plans for capital raise?

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Sudipto Sil, LIC Housing Finance Limited - CFO [31]

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That -- no, we have seen that NHB circular. At appropriate time, it will be informed when the Board takes their decision.

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [32]

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Okay. And sir, there is a spike in the NPA for the builder book. It was around 7% in Q4, which is now 10%. So are there some large slippages?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [33]

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Yes. Actually, what happened, only 2, 3 accounts, which we still are in discussion, they were standard up to March, but somehow, they slipped into NPA. So that's why the amount is a bit high there. So it has gone up. And if you look at our builder portfolio, it is just 7% of our total book. 7% of that is very negligible considering the total volume of our business size.

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [34]

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As a percent of net worth, it becomes significant. That's why.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [35]

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Yes. Yes. But that is there.

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [36]

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Yes. Right, sir. And going forward, any peak number at which you'll operate for the builder book?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [37]

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The builder book, actually, now our focus is on affordable housing. But the builder book, we are open to good quality projects. We're not totally stopping. We are there. And particularly, we'll promote those projects, which cater to affordable housing. That will be our focus area.

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Operator [38]

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The next question is from the line of Kunal Shah from Edelweiss Financial Service.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [39]

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Yes. So again, coming on to this delinquencies in the corporate developer books. If you can give more color in terms of the location and which was the highest account and this is like specific to 1 project. So whether this is like more kind of a project loan? So maybe more clarity in terms of where this INR 600 crores, INR 700-odd crores came in from?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [40]

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Actually, it is not confined to any strategic region or area. It is spread. And builder, actually, as per new norms, even if one project -- suppose some builder has taken 2 projects, loan on 2 projects, one project is standard but if other is not standard, then also, you have to show that as NPA. So that has also affected. And it is not in its specificity.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [41]

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Okay. And what would be the largest account? So this constitutes how many accounts? Is it like 3, 4, 2?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [42]

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This time, it is 3 accounts, I think.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [43]

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Okay. And largest of this would be how much? Sir, if we can just give...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [44]

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I think it's INR 200 crores.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [45]

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Okay. Because total is almost, I would say, INR 700 crores, INR 900 crores to INR 1,600 crores. So total is INR 700 crores. So I'm not sure if it is like 3 accounts. What is the broader split up?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [46]

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Mainly 3 accounts. They actually account for this INR 600 crores, INR 700 crores.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [47]

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Okay. Three accounts are into INR 600 crores, INR 700 crores.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [48]

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Yes.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [49]

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Okay. And in terms of the slippage, so there is no recovery at all in the...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [50]

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No. Recovery, that I'll tell you, you'll also be glad to know. In the last quarter, we recovered out of NPL to March NPA, we recovered some INR 377 crores. So we could make them -- March quarter, whatever NPA was there. Last quarter, our recovery, June quarter, INR 377 crores we recovered. So from...

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [51]

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Sir, is it individual or non-individual?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [52]

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Retail, retail.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [53]

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Yes, retail. Okay. Okay.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [54]

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But despite that recovery, if you see total project and retail, some additions are there. So that's why total NPA has gone up. Efforts are there. Recovery is there.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [55]

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So non-individual, there is no recovery during the quarter, no?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [56]

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In non-individual, there is marginal recovery. There is recovery. But even they are paying. Those who were accounted as NPA, they are also paying. But they're not paying full so they are categorized as NPA. And a delay is there, yes.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [57]

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Okay. Yes. Sir, just maybe in terms of understanding this INR 600 crores, INR 700 crores kind of an increase, this is the exposure to the entire -- maybe the group. So -- but in terms of the project...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [58]

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No, not one group. Different, yes.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [59]

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Yes. But if we want to look at it in terms of the projects purely, wherein maybe there would be some delay, what would be the quantum? So I think maybe because of the norm, you have to consider the overall exposure to that particular entity as GNPL, but stress would still be restricted or delinquency would still be there in a few accounts. So if we have to quantify that, how much would that be?

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Sudipto Sil, LIC Housing Finance Limited - CFO [60]

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Yes. Yes, Kunal, see, actually, the ones that our MD just referred to, which are right now paying, but we have considered them additionally, that will account for around INR 150-odd crores.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [61]

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Okay, INR 150-odd crores.

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Sudipto Sil, LIC Housing Finance Limited - CFO [62]

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Yes. Yes. Which is at present performing and standard assets, but because of the new norms, we have considered them as NPA.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [63]

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Yes. So out of INR 700 crores increase, INR 150 crores is due to reclassification.

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Sudipto Sil, LIC Housing Finance Limited - CFO [64]

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Yes. Yes. Correct.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [65]

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And INR 550 crores is the actual delay?

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Sudipto Sil, LIC Housing Finance Limited - CFO [66]

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Correct, correct.

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Operator [67]

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(Operator Instructions)

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [68]

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Yes. It's a related one on the NPL. So just on the individual side also, if you look at it, there is increase over last 4, 5 quarters from 0.4 to 1.26. And now it's at the highest level, maybe, I think, 1.26. So what are we seeing away? Is it largely LAP, individual and why we are seeing this kind of stress? Because I think across the industry, it's been sustained quite well. So I want to understand even on the individual side the higher NPLs.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [69]

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No. Actually, in the individual, it is total, not only compared to 1 segment within individual, but it is the individual as well as the LAP. And all these are taken together. It does amount to 1.26. And that increase, also we are controlling. That is now contained because we are expanding in the individual segment largely, particularly affordable housing. So that will also be controlled.

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Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [70]

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No, sir, increase in LAP or in retail?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [71]

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In both. Both taken together.

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Operator [72]

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The next question is from the line of Dhaval Gada from DSP Mutual Fund.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [73]

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Sir, just if you could start by giving the GNPA for the industrial home loan segment. What is that number for the quarter and same period last year?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [74]

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Individual, actually, this is 1.26, and the gross...

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [75]

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Core home loan.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [76]

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Core home loan, that is INR 2,307 crores.

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Sudipto Sil, LIC Housing Finance Limited - CFO [77]

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Retail book rates.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [78]

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Retail, retail. The individual retail.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [79]

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Okay. And what are those numbers, sir, in 1Q '19, yes?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [80]

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Last -- Q1 '18, Q1 '18, you mean to say, no?

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [81]

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The same period last year, sir.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [82]

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Same period, it was INR 1,295.47 crores. As against that, it is now INR 2,307 crores.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [83]

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Sir, sorry, just to clarify. This 1.25% is for individual?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [84]

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Individual. Individual, individual total. Yes, yes, yes.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [85]

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I'm asking for only home loan. What is the number, sir?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [86]

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Home loan will be 1.03.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [87]

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Sir, last quarter, 0.9%. If 0.9% was the number last quarter, what is this number this quarter?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [88]

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Now 1.02%.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [89]

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1.02%.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [90]

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Only individual home loan. You mean to say that, no? Individual home loan, 1.02%.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [91]

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And the same number last year was how much? June quarter last year was how much?

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Sudipto Sil, LIC Housing Finance Limited - CFO [92]

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0.69%.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [93]

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0.69%. 0.69%.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [94]

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Okay. So basically, this quarter, actually LAP NPAs are stable. It's the home loan...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [95]

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Slightly, slightly. Yes.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [96]

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Okay. And the second question is, sir, on the pricing environment. I mean you mentioned that you expect some reduction in the funding cost. What -- similar commentary around pricing. So just overall, how do you see pricing and spreads going forward?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [97]

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I think pricing will stabilize looking to overall environment and the easing of liquidity situation. I expect price to be stable to positive.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [98]

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Do you expect the spreads to remain around this level and expand from here? Or...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [99]

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Spreads will be, I think, stable -- stable to positive. That will be good.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [100]

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Okay. And just lastly, on recoveries, some of the development portfolio, any number or time line that you have in mind by when you expect resolution on these developer NPAs?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [101]

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Actually, we are always after the developers to recover as early as possible, but at least in 2 to 3 quarters' time may be taken to resolve business developers' issues.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [102]

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Okay. And sir, what is our absolute net -- the net NPA ratio? Sorry.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [103]

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1.4% net.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [104]

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Sorry, I missed that, sir. How much?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [105]

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1.4%.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [106]

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Okay. And the same number last year was how much?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [107]

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Last year, the same number was -- net NPA,

it was 1 point...

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Sudipto Sil, LIC Housing Finance Limited - CFO [108]

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It was 0.8 something.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [109]

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0.80. 0.80. 1 point -- 0.1 isn't it -- 0.80.

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Operator [110]

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The next question is from the line of Digant Haria from Antique Stockbrocking Limited.

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Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [111]

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Sir, right now, in your commentary, you said that we were -- now going ahead, the focus will be on affordable housing, and we would probably be doing less of LAP and developer loans. So in that context, what sort of margin should we expect in the upcoming quarters? Because at least the public sector banks are still quite aggressive on the housing side -- that normal individual home loan sector.

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Sudipto Sil, LIC Housing Finance Limited - CFO [112]

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Yes, as far as margin outlook is concerned, what our MD just mentioned a few minutes back is that the spreads as well as margins, the outlook is stable to slightly positive. In terms affordable housing, there is no dilution in terms of margins. It's basically a volume play. It's basically a volume play.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [113]

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Volume. Volume.

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Sudipto Sil, LIC Housing Finance Limited - CFO [114]

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But I mean, having said that, because the size -- the ticket size of these accounts are much, much smaller, the risk gets dispersed.

--------------------------------------------------------------------------------

Digant Haria, Antique Stockbroking Ltd., Research Division - Assistant VP, Equity Research [115]

--------------------------------------------------------------------------------

Okay. Okay. Okay. And last question, just repeat of what Dhaval asked before, that LAP -- NPA in the LAP segment would be 2.03%, right? Because based on the...

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [116]

--------------------------------------------------------------------------------

Approximately, yes.

--------------------------------------------------------------------------------

Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [117]

--------------------------------------------------------------------------------

Approximately, 2% -- 2% plus.

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Operator [118]

--------------------------------------------------------------------------------

The next question is from the line of Umang Shah from HSBC.

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Umang Shah, HSBC, Research Division - Analyst of Financials [119]

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I just have 2 questions. One is a data point. I missed the data given in the opening remarks about the volume and the value proportion of affordable housing in the incremental business.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [120]

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Volume-wise, actually, current year, current year, so far, we have disbursed 10,073 loans under PMAY and amounting to INR 2,021 crores, and which contributes to 24% of our total disbursement in terms of volume and at 21% in terms of value.

--------------------------------------------------------------------------------

Umang Shah, HSBC, Research Division - Analyst of Financials [121]

--------------------------------------------------------------------------------

Okay. And this is for Q1, right?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [122]

--------------------------------------------------------------------------------

For Q1 only.

--------------------------------------------------------------------------------

Umang Shah, HSBC, Research Division - Analyst of Financials [123]

--------------------------------------------------------------------------------

Okay, okay. And my second question was related to the ECL model. Basically, what is the database that we follow? I mean it's -- the base data is for what vintage?

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Sudipto Sil, LIC Housing Finance Limited - CFO [124]

--------------------------------------------------------------------------------

Yes. It's 20 quarters. 20 quarters.

--------------------------------------------------------------------------------

Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [125]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Umang Shah, HSBC, Research Division - Analyst of Financials [126]

--------------------------------------------------------------------------------

20 quarters. And rolling forward every quarter?

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Sudipto Sil, LIC Housing Finance Limited - CFO [127]

--------------------------------------------------------------------------------

Yes, yes.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [128]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [129]

--------------------------------------------------------------------------------

It's a rolling model.

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Operator [130]

--------------------------------------------------------------------------------

The next question is from the line of Jignesh Shial from Emkay Global Financial Service.

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Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [131]

--------------------------------------------------------------------------------

These are quick data-keeping questions only. So what is our absolute quantum of gross NPA for the quarter? And what was (inaudible) -- yes. Sorry.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [132]

--------------------------------------------------------------------------------

3,887.17 crore.

--------------------------------------------------------------------------------

Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [133]

--------------------------------------------------------------------------------

And what was the same amount last year, same quarter, Q1 FY '19?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [134]

--------------------------------------------------------------------------------

2,036.32 quarter -- 2,036.32 crore.

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Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [135]

--------------------------------------------------------------------------------

And what will be your net NPA number for this quarter, 1.98? Is it correct?

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Sudipto Sil, LIC Housing Finance Limited - CFO [136]

--------------------------------------------------------------------------------

Net NPA is not...

--------------------------------------------------------------------------------

Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [137]

--------------------------------------------------------------------------------

Gross is 1.98.

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Sudipto Sil, LIC Housing Finance Limited - CFO [138]

--------------------------------------------------------------------------------

That is gross NPA, 1.98.

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Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [139]

--------------------------------------------------------------------------------

Okay. And the net is 1.40?

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [140]

--------------------------------------------------------------------------------

Net is 1.4.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [141]

--------------------------------------------------------------------------------

1.40.

--------------------------------------------------------------------------------

Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [142]

--------------------------------------------------------------------------------

And gross NPAs individual, just reconfirming it, is 2,307 crores.

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [143]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [144]

--------------------------------------------------------------------------------

And net -- sorry. And corporate is 1,580?

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Sudipto Sil, LIC Housing Finance Limited - CFO [145]

--------------------------------------------------------------------------------

Balance.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [146]

--------------------------------------------------------------------------------

Balance, yes.

--------------------------------------------------------------------------------

Jignesh Shial, Emkay Global Financial Services Ltd., Research Division - Research Analyst [147]

--------------------------------------------------------------------------------

Balance. Perfect. That's useful.

--------------------------------------------------------------------------------

Operator [148]

--------------------------------------------------------------------------------

The next question is from the line of Darpin Shah from HDFC Securities.

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Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [149]

--------------------------------------------------------------------------------

Did I hear correct that 8 accounts in developer loans form 68 -- 65% of the NPA?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [150]

--------------------------------------------------------------------------------

Yes, yes, that's correct.

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Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [151]

--------------------------------------------------------------------------------

Yes. So can you just also highlight -- can you highlight, what are the recovery processes we have started in these accounts and until what level we have reached? And the second is how much provision coverage we are carrying in these developer loan accounts?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [152]

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Actually, all the legal action, we have initiated. Simultaneously, there is a discussion also, negotiation going on. SARFAESI action already initiated and...

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Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [153]

--------------------------------------------------------------------------------

In all the accounts? I mean the top 7, 8 accounts?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [154]

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Recently, we are yet to initiate. This quarter, whatever has done, 3, 4 accounts. That, we have to initiate, but all others, we have already initiated. Then, negotiation is also going on because some accounts are still paying. They are not paying full amount. Partial payment continues, so that demonstrates that -- their positive approach, the intention to pay. So that's why they are paying.

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Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [155]

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But then can we see a resolution in the next quarter or 2 or...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [156]

--------------------------------------------------------------------------------

I think, 2, 3 quarters, some accounts will be resolved.

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Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [157]

--------------------------------------------------------------------------------

How much can we expect?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [158]

--------------------------------------------------------------------------------

That exactly is very difficult because of the way we are interacting and are getting response. I am hopeful, at least by year-end, some accounts will come out of NPA.

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Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [159]

--------------------------------------------------------------------------------

Okay. And how much is the coverage we are having in these accounts in the developer book, the provision coverage?

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Sudipto Sil, LIC Housing Finance Limited - CFO [160]

--------------------------------------------------------------------------------

Yes. Total coverage in the -- I mean, recently, whatever provisions have been made have been made mostly on account of the delinquencies in the builder accounts, but overall, if you want the coverage, then the provision will be approximately -- well, putting together all the standard as well as the...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [161]

--------------------------------------------------------------------------------

And the nonstandard.

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Sudipto Sil, LIC Housing Finance Limited - CFO [162]

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Standard as well as the nonstandard assets, total provisions on the book will be 1,900 crores. Specifically, for the builder loans, it will be approximately around 490 crores, a little less than 500 crores.

--------------------------------------------------------------------------------

Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [163]

--------------------------------------------------------------------------------

And that includes standard?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [164]

--------------------------------------------------------------------------------

Yes.

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Sudipto Sil, LIC Housing Finance Limited - CFO [165]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [166]

--------------------------------------------------------------------------------

But excluding standard asset provision, how much it will be?

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Sudipto Sil, LIC Housing Finance Limited - CFO [167]

--------------------------------------------------------------------------------

You knock off 95 crores, so it will be around 400 crores.

--------------------------------------------------------------------------------

Operator [168]

--------------------------------------------------------------------------------

The next question is from the line of Abhijit Tibrewal from ICICI Securities.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [169]

--------------------------------------------------------------------------------

Sir, if I look at your cost of borrowings, I see cost of borrowings have come down for NCDs, CPs, NHB, but our cost of borrowings have not come down for the bank term loan. Is there anything that we should know or anything that you'd like to comment?

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Sudipto Sil, LIC Housing Finance Limited - CFO [170]

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Yes. You certainly will be aware of it, that the rate of transmission as far as the bank MCLRs are concerned, is happening but happening in small bps, 5 basis points or so. So -- but another thing which you would have certainly noted, I'm sure, is that the overall exposure, that is the borrowings from our bank loans has come down between March and June. And that is -- the reason of that is because the cost of funds from that source is more expensive. So we have cut down the exposure there.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [171]

--------------------------------------------------------------------------------

Okay. All right. And sir, out of the total credit cost of 353 crores in the quarter, what was the quantum of write-offs that we took?

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Sudipto Sil, LIC Housing Finance Limited - CFO [172]

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No write-offs.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [173]

--------------------------------------------------------------------------------

No write-off.

--------------------------------------------------------------------------------

Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [174]

--------------------------------------------------------------------------------

No write-offs.

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [175]

--------------------------------------------------------------------------------

No write-offs.

--------------------------------------------------------------------------------

Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [176]

--------------------------------------------------------------------------------

Okay. And the slippages in the developer or project finances, is that number correct, the 600 crores, 700 crores of the number that we are talking about? Were they the slippages in developer or project finance in Q1?

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Sudipto Sil, LIC Housing Finance Limited - CFO [177]

--------------------------------------------------------------------------------

Yes.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [178]

--------------------------------------------------------------------------------

Okay. And sir, just one last question. If I heard it right, you talked about those 8 projects which account for 65% of the total NPAs in project finance. I mean, geographically, how are -- where are they exactly in this quarter?

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Sudipto Sil, LIC Housing Finance Limited - CFO [179]

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That is spread across.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [180]

--------------------------------------------------------------------------------

Spread across?

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Sudipto Sil, LIC Housing Finance Limited - CFO [181]

--------------------------------------------------------------------------------

Yes.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [182]

--------------------------------------------------------------------------------

Yes, yes, yes.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [183]

--------------------------------------------------------------------------------

Nothing specific to, let's say...

--------------------------------------------------------------------------------

Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [184]

--------------------------------------------------------------------------------

Nothing specific, yes.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [185]

--------------------------------------------------------------------------------

Delhi, NCR or Mumbai region?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [186]

--------------------------------------------------------------------------------

No, no, no.

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Sudipto Sil, LIC Housing Finance Limited - CFO [187]

--------------------------------------------------------------------------------

No, no, no.

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Operator [188]

--------------------------------------------------------------------------------

The next question is from the line of Bunty Chawla from B&K Securities.

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Bunty Chawla, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [189]

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All my questions are answered. Just one data-keeping point, if you can share: Total provision, you said 1,900 crores on the -- with respect to ECL provisioning. So can you share the same number with respect to NHB guidelines?

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Sudipto Sil, LIC Housing Finance Limited - CFO [190]

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The NHB guidelines, it is 1,912 crores.

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Bunty Chawla, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [191]

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Okay, not much difference between the 2.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [192]

--------------------------------------------------------------------------------

Yes. There will be even more.

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Sudipto Sil, LIC Housing Finance Limited - CFO [193]

--------------------------------------------------------------------------------

Yes.

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Operator [194]

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The next question is from the line of [Sagar Shah] from Alphaline Wealth Advisors.

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Unidentified Analyst, [195]

--------------------------------------------------------------------------------

My first question was regarding to your GNPL outlook actually. And so you have done 1,900 crores provisions as per ECL provisions, so what is your outlook on the remaining book of ours actually and looking at the current environment? My first question was that.

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Sudipto Sil, LIC Housing Finance Limited - CFO [196]

--------------------------------------------------------------------------------

What exactly do you want to know? Sorry.

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Unidentified Analyst, [197]

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Of your remaining book, what is your outlook regarding the same actually? Are you seeing the remaining book as standard? Or are you seeing so -- are you expecting some slippages in the coming quarters from that book?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [198]

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Actually, we have -- our recovery mechanism, we have strengthened it. Account-wise, the account, we are now strictly monitoring, but we do not have control on other external factors. What we see, at least if we are able to stabilize because there is a recovery. As I told, the first quarter, we recovered some 377 crores, but the slippage is a little more. But in the remaining quarters, our focus will be more on recovery, asset quality, all those things will be there. So I don't think much increase. At least, if I am able to stabilize it or reduce it, that will be -- I think, will be a good performance.

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Unidentified Analyst, [199]

--------------------------------------------------------------------------------

Okay. Okay. And looking at (inaudible), you told that our cost of funds, you expect it to decrease actually, looking at the current interest rate environment. So something like are we going to pass on the rates for the incremental loans that we are going to give going ahead? And we are -- will we expect a pressure on the NIMs going ahead?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [200]

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You see actually, now our one loan scheme, we have floated that is up to 31st August at 8.4% interest rate. We are now giving a new home loan at 8.4%. So that means we are also passing on to new customers whatever benefit is there, interest benefit that is in there.

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Unidentified Analyst, [201]

--------------------------------------------------------------------------------

Okay. So sir, do we expect a pressure on our spreads or NIMs going ahead, or will we maintain the same in the coming quarters?

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Sudipto Sil, LIC Housing Finance Limited - CFO [202]

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So I think the pressure -- in fact, if you look at the funding environment, it has become quite comfortable. There is a significant amount of liquidity which has come into the system. And even today also, the tenure has come down quite a bit. So there is no pressure as far as the funding side is concerned, at this point in time.

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Operator [203]

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The next question is from the line of Adarsh from Nomura.

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Adarsh Parasrampuria, Nomura Securities Co. Ltd., Research Division - Executive Director [204]

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On your Stage 2 assets, that number is increasing. So I just wanted some color on what's happening there and more importantly, the composition there, right? What part of that -- can you break that up between retail and corporate? And what's the provisioning policy? Because your provisioning was very low. The book keeps growing in terms -- in percentage terms as well. So what's the -- how do we look at the coverage on the Stage 2 book?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [205]

--------------------------------------------------------------------------------

Yes.

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Sudipto Sil, LIC Housing Finance Limited - CFO [206]

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So yes. As far as the overall -- in the opening remarks, what we mentioned is that there is certainly a delay which is happening, due to which there is a transition from Stage 2 to Stage 3 as well as from Stage 1 to Stage 2. So that is something which is there. As far as the breakdown of the Stage 2 is concerned, on the retail side it is around a little less than 4.5. On the non-retail segment it is around 6, slightly more than 6. So that is how it stacks up in terms of the Stage 2 in these 2 areas.

As regards the provisioning cover is concerned, the provisioning is derived out of an ECL model. And we have also kept in mind the provisioning required as per the NHB. And we have actually done slightly more than what was required, as far as the NHB provisioning requirement was because that was the number which came out of the ECL, which is basically a model which takes into consideration the potential of, probability of default and the loss-given default. And whenever there is a deterioration in the collections or a delinquency string, it actually captures that into the provisioning requirement. So that is actually taken care much, much more dynamically in the ECL model.

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Adarsh Parasrampuria, Nomura Securities Co. Ltd., Research Division - Executive Director [207]

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Sir, the only problem with that, you have 20 quarters of data, as you roll for 2, 3, 4 more quarters and you had problems -- you didn't have problems for the first 3 years of your ECL model data, and last 2 years is the only where the NPAs have gone up. As you roll forward, the experience or at least the NPA that shows up now will reflect or become a larger part of your ECL model, which would imply that your slippage rate from Stage 2 to Stage 3 and Stage 1 to Stage 2 will also increase. I'm just wondering if -- why will this not happen and hence require larger ECL provisioning as we go in the next like 2, 3, 4 quarters.

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Sudipto Sil, LIC Housing Finance Limited - CFO [208]

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That is exactly what has happened this quarter itself...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [209]

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That is quite real on...

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Sudipto Sil, LIC Housing Finance Limited - CFO [210]

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That the quarter -- the ECL model factors the probability and the loss-given default. Mind you it is all a predictive model. So these things, what you've just articulated, your concerns -- the concerns that you have articulated, is already factored into the ECL model which has given this number.

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Adarsh Parasrampuria, Nomura Securities Co. Ltd., Research Division - Executive Director [211]

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Okay and understood. Just one more thing: Like somebody asked on resolutions, right? So these 5 accounts. So what -- like you know broadly what the security cover is now and -- on these 5 large accounts. And we've been talking about some recoveries for the last 2, 3 years on NPAs that happened about 1 year, 1.5 years back. So what's the status on those?

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Sudipto Sil, LIC Housing Finance Limited - CFO [212]

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Yes. As far as the security cover is concerned, the minimum security cover taken is 1.5x. So the LTV accordingly will be in the -- between average -- if you take off all -- on all these cases, the LTV will be in a range between 30 -- 40 to 50. So the security cover will be almost 2x on an average because there's -- some repayment has also happened on the exposures that they had taken initially. So that is as far as the LTV and the security cover is concerned, without considering any appreciation in the land value from a point-to-point basis. So that is irrespective of that. So if there is an underlying increase in the value of land between -- on a point-to-point basis, that has not been factored in. So that is one thing.

As far as the recovery is concerned, you will recollect, last year, in first quarter, we had made a recovery where the amount recovered was almost 70% higher than the exposure taken. So it takes time, but because the value, underlying value, of the security is quite good, in our view. And the legislative process obviously, whatever the legal processes taken, will take its time, but we are still confident that we will not undertake any losses on these accounts, on these exposures.

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Adarsh Parasrampuria, Nomura Securities Co. Ltd., Research Division - Executive Director [213]

--------------------------------------------------------------------------------

And last question, Sudipto, is on what constitutes Stage 2? Is it like any overdue; or overdue beyond 60 days, 30 days? What...

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Sudipto Sil, LIC Housing Finance Limited - CFO [214]

--------------------------------------------------------------------------------

No, no, no. It is beyond 30 days.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [215]

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Yes, beyond 30.

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Sudipto Sil, LIC Housing Finance Limited - CFO [216]

--------------------------------------------------------------------------------

Beyond 30.

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Adarsh Parasrampuria, Nomura Securities Co. Ltd., Research Division - Executive Director [217]

--------------------------------------------------------------------------------

So anything beyond 30. So 30 to 90 is...

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Sudipto Sil, LIC Housing Finance Limited - CFO [218]

--------------------------------------------------------------------------------

Yes. We are -- very strictly, we have enforced that. And very strictly, we have enforced -- there is a delay. There is no doubt about that, that payment delays are there. In fact, there are accounts which are coming to us as -- the repayments which are coming to us after 30 days, but we have very strictly considered them as Stage 2. And we have disclosed them also.

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Operator [219]

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The next question is from the line of Nilang Mehta from HSBC Global.

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Nilang Mehta, HSBC Global Asset Management (Hong Kong) Ltd. - Portfolio Manager [220]

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Sir, can you tell me the new slippages which have happened on the developer side? When was -- what is the vintage of this loan? When were they given, which year?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [221]

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3 years plus; 3 to 4 years. It is not a first-year quick mortality, but it has run for more than 3 years. Three years, 4 years in some cases.

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Nilang Mehta, HSBC Global Asset Management (Hong Kong) Ltd. - Portfolio Manager [222]

--------------------------------------------------------------------------------

And these are [about initial] project loans, right?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [223]

--------------------------------------------------------------------------------

(inaudible) -- yes?

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Nilang Mehta, HSBC Global Asset Management (Hong Kong) Ltd. - Portfolio Manager [224]

--------------------------------------------------------------------------------

Yes, these are project loans, right, sir?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [225]

--------------------------------------------------------------------------------

Project loans. And then projects are almost complete, but some sales are not happening. So that's why there is some problem.

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Nilang Mehta, HSBC Global Asset Management (Hong Kong) Ltd. - Portfolio Manager [226]

--------------------------------------------------------------------------------

Okay. So the -- these lower -- so the project is complete, and because of sales traction not being there, there are cash flow issues. And that's why it's become an NPA.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [227]

--------------------------------------------------------------------------------

Yes, right, yes, yes, yes.

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Nilang Mehta, HSBC Global Asset Management (Hong Kong) Ltd. - Portfolio Manager [228]

--------------------------------------------------------------------------------

Okay. So any of your loans which are stuck right now where projects are not progressing because of cash flows not being available on sales or from financing side? Is that -- or all the NPAs are mostly completed projects.

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Unidentified Company Representative, [229]

--------------------------------------------------------------------------------

No.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [230]

--------------------------------------------------------------------------------

No such cases. Actually, mostly it is affected because of a slow sale.

--------------------------------------------------------------------------------

Operator [231]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Bhaskar Basu from Jefferies Group.

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Bhaskar N. Basu, Jefferies LLC, Research Division - Equity Analyst [232]

--------------------------------------------------------------------------------

Yes. Just one question, a follow-up on this developer loan. You mentioned that 2 or 3 accounts which have slipped during the quarter. And obviously, 150 crore is projects which are projects which are still paying. But within the projects which have slipped, where are these located? And between the 3, which of these -- what will be the stage of completion? I heard you mention that most of them are complete, but some more color would be really helpful.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [233]

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Actually, these are not confined to 1 region. These are spread. And almost 80%, 90% -- some projects are almost complete. Sales are not happening. 80%, 90%, sales have happened, but still there are inventories. And other places, more than 80% completion is there, in some projects.

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Bhaskar N. Basu, Jefferies LLC, Research Division - Equity Analyst [234]

--------------------------------------------------------------------------------

So just to understand. These are multiple loans on multiple projects to a particular developer. Is that what you mean when you're saying that these are in different locations? Because...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [235]

--------------------------------------------------------------------------------

These are different builders, different builders and different projects.

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Bhaskar N. Basu, Jefferies LLC, Research Division - Equity Analyst [236]

--------------------------------------------------------------------------------

But if there are 2, 3 accounts, which mean that 2, 3 builders which are involved...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [237]

--------------------------------------------------------------------------------

Yes, 2, 3 projects in different locations.

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [238]

--------------------------------------------------------------------------------

Yes, yes.

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Bhaskar N. Basu, Jefferies LLC, Research Division - Equity Analyst [239]

--------------------------------------------------------------------------------

Yes, so which -- where will these 3 locations be?

--------------------------------------------------------------------------------

Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [240]

--------------------------------------------------------------------------------

That we shouldn't like to do...

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [241]

--------------------------------------------------------------------------------

The top 10 cities.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [242]

--------------------------------------------------------------------------------

Big cities.

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Bhaskar N. Basu, Jefferies LLC, Research Division - Equity Analyst [243]

--------------------------------------------------------------------------------

Okay. Okay. Fair. Just one more question, on the incremental yield, if you can break it down between home loan and developer. Housekeeping question...

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [244]

--------------------------------------------------------------------------------

Yes, yes. For the home loan, it is 9.97%.

--------------------------------------------------------------------------------

Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [245]

--------------------------------------------------------------------------------

That is [10]...

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [246]

--------------------------------------------------------------------------------

I'm telling you on the annualized business, Bhaskar, okay, yes?

--------------------------------------------------------------------------------

Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [247]

--------------------------------------------------------------------------------

Yes, 9.9, builder...

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [248]

--------------------------------------------------------------------------------

9.97% is for the home loan piece. For the other that -- the noncore portion, that is ex of home loan in the retail segment, that is 11.4%. And...

--------------------------------------------------------------------------------

Bhaskar N. Basu, Jefferies LLC, Research Division - Equity Analyst [249]

--------------------------------------------------------------------------------

Okay. And the developer...

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [250]

--------------------------------------------------------------------------------

13 point...

--------------------------------------------------------------------------------

Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [251]

--------------------------------------------------------------------------------

Around 13%.

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Sudipto Sil, LIC Housing Finance Limited - CFO [252]

--------------------------------------------------------------------------------

13.52%, to be more precise.

--------------------------------------------------------------------------------

Operator [253]

--------------------------------------------------------------------------------

The next question is from the line of Hardik Shah from Max Life Insurance.

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [254]

--------------------------------------------------------------------------------

Sir, just a follow-up question. What will be the ALM...

--------------------------------------------------------------------------------

Operator [255]

--------------------------------------------------------------------------------

Sorry to interrupt you, but please speak a bit louder, Mr. Shah?

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [256]

--------------------------------------------------------------------------------

Yes. What is the ALM position in the "less than 1 year" bucket?

--------------------------------------------------------------------------------

Sudipto Sil, LIC Housing Finance Limited - CFO [257]

--------------------------------------------------------------------------------

Yes, sorry. We're not able to understand, Hardik. Can you please speak up a little loudly?

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [258]

--------------------------------------------------------------------------------

What is the ALM position in the "less than 1 year" bucket?

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Sudipto Sil, LIC Housing Finance Limited - CFO [259]

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Yes. "Less than 1 year" bucket, the -- it is within the NHB norms of 15%.

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [260]

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But what would the mismatch be?

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Sudipto Sil, LIC Housing Finance Limited - CFO [261]

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Mismatch, around 13% or so, 13%. Within 15%, that is the maximum that the NHB allows. We have 13%...

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [262]

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Okay. But how would shorter buckets look? And whether...

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Sudipto Sil, LIC Housing Finance Limited - CFO [263]

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Actually 1 to -- 0 to 1 year only.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [264]

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0 to...

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Sudipto Sil, LIC Housing Finance Limited - CFO [265]

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Are you asking overall, or 0 to 1 year?

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [266]

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0 to 1 year.

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Sudipto Sil, LIC Housing Finance Limited - CFO [267]

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Right. 0 to 1 year is minus 13. Overall, it is positive by 50.3%.

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Hardik Shah, Max Life Insurance Company Limited - Chief Manager Investments [268]

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Okay, sir. And sir, out of the builder loans, how many will be to the subvention schemes?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [269]

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No, not this...

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Sudipto Sil, LIC Housing Finance Limited - CFO [270]

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No, we don't -- no, none of them.

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Operator [271]

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The next question is from the line of Dhaval Gada from DSP Mutual Fund.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [272]

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Yes. Sudipto, just one question related to this individual home loan of -- NPA of about 1% plus. Would it be like the highest since 2010? I just wanted to check that.

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Sudipto Sil, LIC Housing Finance Limited - CFO [273]

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Since 2000?

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [274]

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'10. The individual home loan, I'm saying, the...

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Sudipto Sil, LIC Housing Finance Limited - CFO [275]

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No, no. I think 2011 or 2012 was a higher percent, yes. Slightly higher.

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Dhaval Gada, DSP Investment Managers Pvt. Ltd. - Assistant VP of Investments & Equity Analyst for Financials [276]

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Okay. And any sort of corrective action that we are taking on this segment to address? Or I mean any thoughts around this level of NPAs?

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Sudipto Sil, LIC Housing Finance Limited - CFO [277]

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So obviously, to...

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [278]

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We have actually formed a task force to monitor each individual loan account. And our -- down the line, at area office level, back office level, we are closely monitoring. The momentum has today -- before also due date, the notice goes, SMS goes to the customers, reminding them that the due date is there. They should pay. And immediately, if they fail, next day, again, message goes out. People also go on to contact them. So there is always a pressure. So I don't think the individual loan segment, that will, I mean, increase with their -- in default.

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Operator [279]

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Next question is from the line of Mohit Surana from CLSA.

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Mohit Surana, CLSA Limited, Research Division - Research Analyst [280]

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Sir, most of my questions are answered. Just...

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Operator [281]

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Mohit, sorry to interrupt you. Please speak a bit louder.

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Mohit Surana, CLSA Limited, Research Division - Research Analyst [282]

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Yes, yes. I just wanted to get your thoughts on the growth going forward.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [283]

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Actually, for the current year, looking to total environment, we are very hopeful. I see 15% growth, at least 15% in the current year in our home loan segment.

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Operator [284]

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Next question is from the line of Aakash Dattani from HDFC Securities.

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Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [285]

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All my questions have been answered.

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Sudipto Sil, LIC Housing Finance Limited - CFO [286]

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Thank you.

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Operator [287]

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Next question is from the line of Abhijit Tibrewal from ICICI Securities.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [288]

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Sir, just wanted to understand. This particular quarter, we have shown great amount of caution in the developer or project finance segment. Can we expect the same amount of caution in the coming quarters? So the reason I ask this is September quarter last year, we disbursed about 3,000 crores in the project segment. So can we expect the same level of caution in the coming quarters? Or will we, I mean, again start evaluating opportunities in the project segment, developer segment?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [289]

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Actually you see, project or developer segment, as compared to last year, we gave 60 crore less loan. It was earlier 89 crores. This quarter, we gave it 29 crore, but you are telling me to expect a September, next quarter. We do not per se discourage project loan. We are for project loan, but our credit appraisal will be more stringent, looking to present environment. And we'll focus more on marketability so that the builder gets the cash flow and repays our money in time. Those things will be there. And we will definitely promote those projects which are into affordable housing so that our monies are secured. So I cannot compare that last year we gave so much and this year, there is no question of being cautious but being careful. So that will be there, but it will be more careful and more stringent.

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [290]

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Okay, sir. And sir, the last -- one last question. Sir, I just wanted to gather your thoughts. Why do we is there a deterioration in the individual home loan segment?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [291]

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In individual...

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Abhijit Tibrewal, ICICI Securities Limited, Research Division - Research Analyst [292]

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Individual home loans. Why is there a deterioration in the asset quality?

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [293]

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Actually, this is first quarter, and I don't see much of any specific reason. It is just seasonality. And some loans, if they don't pay within 3 months, they pay next month, so those also slip into, but the individual loans, there will be some NPA, but our effective monitoring and all those things are there. So we are hopeful in that segment NPA will never increase.

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Operator [294]

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Ladies and gentlemen, due to time constraint, that was the last question. I will now hand the conference to the management for closing comments.

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Siddhartha Mohanty, LIC Housing Finance Limited - MD, CEO & Director [295]

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Yes. Thank you, everybody. It was a very good interaction with all of you. We assure you to take care of your concerns, and we are committed to give better performance in the coming quarters. Thank you very much.

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Operator [296]

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Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.