Cos loan portfolio for affordable housing finance increases 10% in June: report
The total affordable housing finance companies (AHFCs) loan portfolio rose 10% to Rs 60,468 crore as of June 30, well below the five-year average of 24%, Icra Ratings said in a report.
The AHFC’s industry reported gross NPA / Stage 3 (excluding data for one player) stood at 2.1% as of June 30, 2021, the agency said.
Loan portfolio growth moderated to 10% year-over-year in FY2021 and Q1 FY2022 due to lockdowns following wave 2 of COVID; while the portfolio remained stable as of June 30, 2021 compared to March 31, 2021, the agency’s vice president and area head (financial sector ratings) Manushree Saggar said in the report.
COVID 2.0 has put additional pressure on the asset quality metrics of these players, according to the report.
With tighter lockdowns in various states in the first quarter of fiscal 2022, collections of these AHFCs have been affected and unlike the moratorium and restrictions on bucket movement, which were available in the first quarter of fiscal 2021, there were no such waivers this time around, he said.
As a result, defaults, especially in the softer segments, have increased significantly, the report added.
The 30+ days overdue (dpd) for some selected AHFCs fell to 7.2% as of June 30, 2021, compared to around 3.2% as of March 31, 2021, although the 90+ dpd title remained under control, a- he declared.
With steadily improving collection efficiency since June 2021, forward bucket movement is likely to be contained for most players, although resolution / cancellations may take longer as it would be difficult for borrowers from these AHFCs to clear multiple installments at the same time, Saggar mentioned.
We expect GNPA / Stage 3 to be 3.6-3.9% by the end of March 2022, up from 3.3% as of March 31, 2021, she said.
According to the report, the liquidity profile of these entities should remain comfortable, supported by the significant liquidity on the balance sheet maintained by these players.
Given the likelihood of high credit costs compared to pre-COVID levels, Return on Assets (RoA) is expected to remain at 2.2-2.4% in FY 2022 over a range of 1, 8 to 2.4% in FY 2017-21, despite the improved scale of operations, added Saggar.
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