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Informist, Monday, Aug. 4, 2025

By Vidhushi Rajpurohit and Krity Ambey

NEW DELHI – LIC Housing Finance Ltd.'s business strategy for 2025-26 (Apt-Mar) entails focussing on protecting margin over growing loan disbursements at a minimal spread, the company's management said at a post-earnigns conference call Monday. The non-banking finance company reported a 7.5% cost of funds in the June quarter, and a 9.6% annualised yield on advances. 

"We, as a company, need to take a call as to whether we really need to grow the book at almost minimal or no spreads, or we need to protect our margins," the company's management said. "And what I personally feel, given our push and our shove and with our backs to the wall, I would prefer to protect margins rather than look at growth."

The non-banking finance company's net interest margin for the June quarter was 2.68%, according to the quarterly results released late Friday. Going ahead, the company's management does not expect too much deviation in the net interest margin from what it saw in the first quarter of the financial year. "Whatever compression is there in the yield on advances will be offset by the compression in the cost of borrowing," the management said.

As a result of the cut in the policy repo rate by the Reserve Bank of India, LIC Housing Finance's cost of borrowing has fallen 69 basis points, the management said, adding that it expects the cost to come down by another 5-10 bps. The management also said there was a slight delay by them in cutting loan rates after the RBI's rate action.

The delay in rate cut transmission dampened the financier's loan demand in the June quarter, the management said. LIC Housing Finance disbursed INR 131.16 billion in the quarter, up only 1.6% on year. But from August onwards, as the festival season approaches, monthly loan disbursements should jump to over INR 60 billion, the management said.     

LIC Housing Finance expects a double-digit growth in its loan disbursement in FY26, the management said, without specifying a number. The management said it would be able to give a better picture of the year's growth target after the financial results for the September quarter. 

The non-bank finance company's management described the financial results for the June quarter as "flattish", but said they were not worried as they expect some traction in the coming quarters. LIC Housing Finance's profit for the June quarter rose only 4.6% on year to INR 13.60 billion. Sequentially, the net profit fell 0.6%. 

Shares of LIC Housing Finance gained on Monday after closing at INR 570.25 on Friday, when it declared its financial results post market hours. AT 1342 IST, the shares traded 3.3% higher at INR 589.10 on the National Stock Exchange.  End 

Edited by Tanima Banerjee

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