Analyst Concall
LIC Housing Fin expects NIM to improve slightly in H2 FY26
This story was originally published at 20:14 IST on 30 October 2025
Register to read our real-time news.Informist, Thursday, Oct. 30, 2025
Please click here to read all liners published on this story
--LIC Housing: Expect asset quality to improve moving ahead
--CONTEXT: Comments by LIC Housing Fin mgmt at post-earnings analyst concall
--LIC Housing: Hopeful to see double-digit disbursement growth by end-FY26
--LIC Housing: See credit cost around 15 bps by end-FY26
--LIC Housing: Don't see further compression of NIM
--LIC Housing: Have strong pipeline of un-disbursed sanctions
--LIC Housing: Targetting INR 50 bln from construction finance H2 FY26
--LIC Housing: Prefer safeguarding margins over business growth
--LIC Housing: Question of growth worrying for us
--LIC Housing:Scope for co-lending, direct lending arrangements to boost book
--LIC Housing: See no further scope to bring down loan rates
By Cassandra Carvalho and Shubham Rana
MUMBAI/NEW DELHI – LIC Housing Finance Ltd. is unlikely to see further compression in its net interest margin in the rest of the financial year 2025-26 (Apr-Mar). Instead, the housing financier expects the net interest margin to improve, the company's management told analysts in a post-earnings call Thursday. The company declared its earnings for the September quarter Wednesday. It reported a net interest margin of 2.62%, against 2.68% a quarter ago.
"There are no further resets which are going to be placed," the management said on the call. "So I believe this 2.62% NIM, which we are seeing at the end of Q2, is the bottom.... I do not see any reason why there should be any compression of NIMs any further."
The management expects the company's cost of borrowing to decrease further in the December quarter by 5-6 basis points, which would result in a slight improvement in its net interest margin. The company said it would prefer safeguarding its net interest margin over pursuing business growth and it does not see scope for further reduction in pricing of new loans. The management said the current rates the company is offering are fairly competitive, though state-owned banks are competing aggressively in the same segment.
The management, however, also expressed concern on the low growth numbers and said the board has asked for comprehensive structuring of the company. The company is currently in the process of taking a consultant on board for the purpose and said the restructuring will be done within 3-6 months. The housing financier reported a net profit of INR 13.54 billion, up just 2% on year and down 0.4% on quarter.
The non-bank lender also expects its asset quality to improve in the future. The company said it has been making slightly higher provisions than required by regulations, based on its own internal formula for provisioning, which has resulted in a higher provision coverage ratio. The company's provision coverage ratio was 53.20%, slightly higher than 49.42% a year ago.
Asked about the credit cost expectation this year, LIC Housing Finance's management said it is expected to be around 15 bps by the end of FY26. The company's credit cost was 11 bps in the first half of FY26.
The LIC Housing Finance management is hopeful of seeing double-digit disbursement growth by the end of FY26. During the six months ended September, the company's total disbursements were INR 294.29 billion, up just 0.1% on year. The company's management said there is a strong pipeline of sanctions which are yet to be disbursed, which should help the rise in disbursements in the second half of FY26.
"The green shoots in Q1 (Apr-Jun) and Q2 (Jul-Sept) gives us hope that we will see better growth in Q3 (Oct-Dec) and Q4 (Jan-Mar), which are traditionally strong quarters for LIC Housing Finance," Tribhuwan Adhikari, managing director and chief executive officer, said. "Only worry is the construction finance channel, where the performance has been very, very muted this year. As against 1397 crores (INR 13.97 billion) in H1 of last year, we have only been able to do 156 crores (INR 1.56 billion) for H1 of the current fiscal. So there is a big dent of almost about 900 crores (INR 9.00 billion) there," Adhikari said.
The company continues to be cautious and selective in its approach to the construction finance segment, the management said. LIC Housing Finance is targeting construction finance business of around INR 50 billion this year, higher than INR 40 billion in FY25.
To grow its business, LIC Housing Finance is exploring co-lending or direct assignment channels, Adhikari said. "This is something which we have not at all tried in the past," he said. "There is scope for getting into co-lending arrangements and going in for direct lending or direct assignment, which can also boost my book. We are framing co-lending and our direct assignment policy, which we will get approved by the board." Shares of the company ended 3.9% lower Thursday at INR 570.45 on the National Stock Exchange. End
Edited by Rajeev Pai
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
