The entire mortgage ebook grew 15.5% y-o-y pushed utilizing character book growth of 15.2% y-o-y. Inside the character book, the center mortgage book grew by way of just 10% y-o-y, and the majority of the boom remains driven by way of the LAP/non-core e-book (+50% q-o-q). The slowdown inside the mortgage e-book is driven both by using (i) slower disbursement increase—2% y-o-y and (ii) higher prepayment charges persevering with—12% v/s eight-9% inside the past.
Losing mortgage percentage in our view: The RBI’s sectoral credit statistics indicate that banks are developing mortgages at ~18% y-o-y. Even as this will encompass their LAP books, we trust mortgages would nonetheless be growing +15% y-o-y for banks. With LICHF’s center loan e-book now growing just 10% y-o-y, this certainly implies a drop in market percentage in mortgages.
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other q4 highlights:
Q4FY16 spreads lower than predicted: LICHF stated Q4FY16 spreads of ~170bps v/s 155bps in Q3FY16. In preceding Q4s, there has been a 25-30bps seasonal uptick in spreads for LICHF, adjusted for which reported spreads have been decreasing than predicted. Even as a few spread compression from Q2/Q3FY16 tiers was expected, Q4FY16 spreads have disenchanted regardless of the huge asset blend shift in Q4FY16.
Non-center portfolio ebook increase too excessive: LICHF’s man or woman nonmortgage e-book has grown by ~50% in Q4FY16 and ~120% y-o-y. Whilst we have been cozy with LICHF’s LAP purchaser profile, such an excessive increase in the non-loan person e-book is without a doubt volatile in our view.
Our view on LICHF:
Our view on LICHF:Q4FY16 results had been disappointing because of (i) the slowdown in mortgage disbursements, (ii) the higher prepayment charge inside the mortgage book, and (iii) the leave out in spreads considering the large asset blend shift.
We watch for management statements from Q4FY16, but the slowdown inside the core mortgage portfolio is bad and will result in a profit reduction with the aid of the road.
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Key queries to management in Q4FY16 con call: (i) what’s middle mortgage disbursement growth—our implied numbers imply <5%? (ii) what’s management doing to lessen prepayment fees? (iii) how are you going to control risk within the non-middle ebook developing at +a 100%?Q4FY16 results had been disappointing because of (i) the slowdown in mortgage disbursements, (ii) the higher prepayment charge inside the mortgage book, and (iii) the leave out in spreads considering the large asset blend shift.
We watch for management statements from Q4FY16, but the slowdown inside the core mortgage portfolio is bad and will result in a profit reduction with the aid of the road.
Key queries to management in Q4FY16 con call: (i) what’s middle mortgage disbursement growth—our implied numbers imply <5%? (ii) what’s management doing to lessen prepayment fees? (iii) How will you control risk within the non-middle ebook developing at +a 100%?Key queries to management in Q4FY16 con call: (i) what’s middle mortgage disbursement growth—our implied numbers imply <5%? (ii) what’s management doing to lessen prepayment fees? (iii) How will you control risk within the non-middle ebook developing at +a 100%?
