LIC Housing Finance Q4 Review – Improved Outlook On Net Interest Margin, Asset Quality: Yes Securities

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LIC Housing Finance Ltd. delivered a better-than-expected performance in Q4 FY22 with net interest income/pre-provision operating profit/profit before tax beat of 12%/14%/22%.

Notably, this performance was aided by material net interest margin expansion (largely driven by cost of funds decline) and lower credit cost (underpinned by 15%/5% QoQ reduction in stage-II/stage-III assets).

LIC Housing Finance’s collection efficiency was strong through the quarter (March at 99%) and there were significant non-performing loan recoveries in builder/high-value loan segments.

Stage-II expected credit loss coverage was maintained while stage-III coverage was raised.

Portfolio construct has reverted to pre-pandemic level and expected credit loss coverage is better, which provides visibility of moderate credit cost for coming quarters.

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