My notes from the concal. Mostly covered the growth, npa and business dynamics rather than numbers are ratios…
Asset quality continues to be top priority. Q1 witnessed some deferred impact of the two months moratorium in November, December as well as post demonetization (in January, all the EMIs had become due to together), and there is another big component that was Section 269ST regarding the 2 lakh limit on cash transaction. There was lack of clarity in terms of cash payment for emi. So even if somebody wanted to pay, rules weren’t clear. Every year if you see Q1 always quantum wise and percentagewise is higher.
Want to mark those accounts as NPA and mark for recovery meaning essentials will be initiated or the borrower’s due is to be recovered, not to keep these accounts with two months overdue amount and every month you keep on pressing your people on recovery, which is very costly. If you want better March, Q1 has to be little painful.
Another thing because of which loan sactions were lower is due to many press reports suggesting people to defer their purchases due to rera coming in. Most of the customers of can fin are literate (75% salaried…even non saliered are mostly literate) ans well informed, resulting in them deferring their purchase to q2.
We see lot of positives going fwd; company is pretty confident that q2/3/4 are going to be better compared to Q4 17 or Q1 18. Whatever incremental loan book is created, they are ensuring all the checks and balances are fine tuned, better oversight, better control is put in place. Let the loan book growth be a little slower when the market is not okay.
If you see the incremental loan book during Q1, 95% of that loan book is in affordable redefined income range of up to 18 lakhs pa, LIG is up to 6 lakhs annual income in that (53% of the accounts are in that LIG segments and around 42% are in the MIG segment, MIG segment is more than 6 lakhs to 12 lakhs it is MIG1 and 12 lakhs to 18 lakhs is MIG2), so this is how the composition of the loan book is concerned. This is where going forward the demand is. If you are planing for the housing for all by 2022 then this is the segment where lot of stocks will be created. As of now, there are issues as far as supply side is concerned. There is no doubt the demand is going to come back.
Seeing pressure from cash rich banks. Unfortunately, this problem is in the dna of hfcs. Trying best to make themselves more competitive, but there is a limit to it. Cannot match banks’ rates.
For all the new home loans for the salaried, they have risk based pricing (best rate is for the S1 category that is lowest risk category at 8.5%) and as far as rural and urban housing are concerned, their roi is the best in market now, at 8.25% from July.
Incremental cost of borrowing is 7.65%. The spreads have gone up from 2.61% to 2.75%.
95% of the new sanctions qualify in the affordable segment.
have approvals for 11 branches and 10 satellite offices, so there are six more satellite offices and five more branches to go in next 3 qtrs.
CanFin is the first HFC, which has gone for an annual resetting mode. That is, existing borrower’s interest rate is reset to the existing new rate as per his risk category.
On the CLSS part once you receive the subsidy and you transferred to the account of the customer, it will reduce the loan amount. It will change your EMI. So loan book gets effected. But the demand that clss will generate will compensate this loss.
Maintains 17k book guidance for fy18e.
In all those states where there is clarity about RERA and there are projects that are compliant to RERA …people are buying because it improves the customer confidence. So things have improved at least in the 20 days of q2.
Cap adequacy is already 19%+. They are raising capital to have higher borrowing power, because going forward they want to have better leverage ratio to the debt equity, right now the leverage ratio is 11% (want yo bring down). Should have adequate borrowing capability, so that when growth comes they must not be searching around. There is limitation for borrowing. Expecting demand pick up in 2018…peaking in 19, 20…consolidating in 21, 22.