LIC Housing Finance – Can Profitability Sustain ?

LIC Housing Finance (LICHF) reported strong profits for the fourth consecutive quarter in Q1FY09.

Net interest income grew 43% Y-o-Y to INR 1.5 bn supported by 25% Y-o-Y growth in loan book and 36bps Y-o-Y improvement in net interest margins (NIM). Pre-provision profit grew 57% Y-o-Y to INR 1.5 bn, while operating expenses declined 7% Y-o-Y in Q1FY09. Provisions of INR 97 mn made during Q1FY09 (as against INR 346 mn in Q1FY08). PAT grew 124% Y-o-Y to INR 1 bn.

LICHF reported strong disbursement growth of 24% Y-o-Y in Q1FY09 to INR 15.2 bn – skewed towards residential mortgages.

LICHF is consistently delivering strong profitability quarter after quarter and concerns over stability in business growth and earnings is gradually getting diluted. The company is expected to report a full year EPS of Rs 54.