Mortgage lender LIC Housing Finance will seek shareholders’ approval at its annual general meeting (AGM) on September 28 to raise up to Rs 50,500 crore. The fund raising will be done by issuing debt securities or other hybrid instruments on a private placement basis. The company plans to raise the amount in one year by issuing debt instruments in one or more tranches, till the next AGM.
In its annual report released on Wednesday, the housing finance company has also warned for a moderation in profitability due to the pandemic.
M R Kumar, chairman, LIC Housing Finance said, “The loss of livelihoods and reduction in income, especially for self-employed borrowers, may have an impact on our income and asset quality and we may have to brace ourselves for a moderation in profitability indicators.”
The company has devised a 4-R strategy – retail, recovery, retention and re-engineering – as the guiding force for fighting Covid-19.
However, Siddhartha Mohanty, managing director (MD) and chief executive officer (CEO), LIC Housing Finance, said that lower non-performing assets (NPAs) and a low moratorium book is giving the confidence to underwrite good home loan business. The gross stage 3 loans of LIC Housing Finance declined 3 basis points (bps) to 2.83% in the June quarter, compared to 2.86% in the previous quarter.
Similarly, the loans under moratorium during phase two remained at 25%, maintaining the same level as phase one. The central bank had allowed lenders to grant moratorium relief to borrowers for three months from March 1, in the first phase. The regulator extended moratorium period by three months till August, 2020 in the second phase.
Siddhartha Mohanty had earlier told FE that lender expects lesser number of borrowers to opt for restructuring of loans, compared to loan book under moratorium till June end. The Reserve Bank of India (RBI), on August 6, had permitted resolution of retail and corporate loans with strict barriers.
LIC Housing Finance had reported a 34% year-on-year (y-o-y) growth in net profit during the June quarter to Rs 817 crore due to reduced provisions. Total provisions declined 77.69% in the June quarter to Rs 56.5 crore, compared to Rs 253 crore in the same period a year ago.