Housing finance companies expected to grow 10-12% in FY23: report
National rating agency Icra Ratings on Wednesday revised the growth estimate for housing finance companies (HFCs) to 10-12% for FY23, down from an earlier projection of 9-11%.
The upward revision in HFC growth was pending continued improvement in disbursements.
Icra Vice President and Sector Head (Financial Sector Ratings) Sachin Sachdeva said that after witnessing disruptions in business volumes, due to the second wave of the pandemic, the industry has seen a recovery in disbursements and the growth rate of the HFC portfolio has started to increase over the past few quarters.
“This has helped the industry see an improvement in the growth rate of the portfolio in fiscal 2022. Given the buoyancy of disbursements, we have revised its growth estimate (HFC) to 10-12% for the fiscal year 2023 (vs. 9-11% earlier),” Sachdeva said.
The accounting portfolio of the Non-Banking Financial Companies and Housing Finance Companies (NBFC-HFC) sector grew to Rs 12.2 lakh crore as of March 31, 2022, recording 11% year-on-year growth .
The growth was slightly better than the agency’s growth estimate of 8 to 10 percent for FY22, the agency said in a report.
This was driven by disbursement growth in the last three quarters of FY22 as the second wave of the pandemic impacted business volumes in the first quarter of FY22, it said. he declares.
The industry also saw a reduction in gross non-performing assets (GNPA) in the fourth quarter of FY22 after seeing an increase in the third quarter of the same fiscal year.
The stricter regulations (Notification of the Reserve Bank of India – Prudential Standards on Revenue Recognition, Asset Classification and Provisioning Regarding Clarifications on Advances dated 12 November 2021) on the recognition and updating ARPG level resulted in an increase in ARPGs in the third quarter of FY22.
However, with the increase in recoveries, the industry saw a reduction in RPGs in the fourth quarter of last fiscal year. It has witnessed good recoveries from the restructured portfolio and with the growth in assets under management (AUM), the standard restructured portfolio has fallen to around 1.7% of the AUM as of March 31, 2022.
The agency expects further improvement in asset quality indicators in FY23, with the expectation of improved collections from delinquent accounts.
However, the performance of the restructured book would remain controllable. The rating agency kept its estimate of GNPAs at 2.7-3% as of March 31, 2023, it said.
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