On Repco website you can find the investor presentation for Q1-2016 results. The loan sizes are mentioned there. There are bunch of other important things also mentioned in the presentation. I found it useful.
Cheers,
Krishna
Hi Krishna,
This snapshot is from the investor presentation. It says 1.2 million ie 12 lakhs is the average loan size . Even I remember reading about that 15 lakh figure, but not sure where.
The figures of 18.4lakh and 15.8 lakh were taken from Concall Highlights by Capital Mkt posted by Hemant Bhatia a little earlier in the thread. I havent found time yet to listen to the concall and verify. At first sight it appeared to be relatively quite high numbers.
I think these are incremental nos. i.e. new loans are of this avg size
It could be verified if we listen to the actual con call. My systems not supporting it. If someone has access please verify …
Yes, they are for incremental numbers. I dont doubt what has been posted by Hemant Bhatia, but I would like to listen to the talks/queries/discussion surrounding this point from the concall to get a better feel of where things are headed. On the face of it, it appears as if the growth is more driven by sales price increase (higher loan ticket size) than volume (no. of customers) - just an analogy.
Sammy, as per AR, LAP to be capped at 20% of advances. And % of non salaried to be @ 57%.
V.Raghu executive director explaining about the affordable housing opportunity:
disc: invested
HC orders issue of notices to Ministry, Chairman, Repco Bank
@whipsaw this is 6 months old news. What is the idea behind sharing it now please. Just FYI or any significance is attached to it?
This looks like an important piece of information. Do you have any idea what happened in the last six months? Could they be asked to leave office?
The article talks about Repco Bank and NOT Repco Home Finance. Now, I’m not sure whatever the impact may be, will it percolate to RHFL. But, market would have discounted it anyway if there is anything to worry about.
On a separate note, Repco seems to have taken the lead over Gruh… not just in NIMs and growth potential but also in terms of being an industry bellwether, the recent interview on NDTV profit being a case in point. That to me is extremely interesting because it is marching over Gruh and it’s exorbitant valuations. Some catch-up on the cards?
Let’s be cautious here! I would give Gruh higher marks in risk management. No doubt they have slowed down loan growth compared to Repco. There is rural distress going on so better to be safe than sorry later. Agri comm. prices have crashed worldover leading to great trouble in rural economies. With the benefit of hindsight, Gruh had done it before 2008 crisis so current slowdown in Gruh’s growth could be deliberate.
Disc: Invested with high allocation
3 Likes
It’s very difficult to replicate what Gruh has done but Repco seems to be doing a good job compared to its other peers. Gruh will command premium over Repco in the foreseeable future is what I believe. Overall, in this sector whoever focuses on opportunity size with prudent risk management will grow a lot and also fall lesser in case of bubble bursts in future.
Disclosure: Invested in both companies discussed.
As per BSE announcement:
Repco Home Finance Limited has informed the Exchange that the Company has raised Rs.100 Crore by mode of private placement of 1000 Zero-Coupon Secured, Redeemable and Non-Convertible Debentures (SRNCD) of face value Rs. 10,00,000 each (at par) and maturing on September 06, 2018. (XIRR 9.21%).
This should further reduce the cost of funds as 9.21 is lesser than its current cost of funds which is about 50 basis points above 9.21, if I remember correctly. Though 100 crore is less compared to its current borrowings, the future seems pretty obvious that the cost of funds for Repco will come down BUT the benefits may not be passed to its non-salariedcustomers at the same rate which is more beneficial to Repco as it has higher proportion of non-salaried borrowers in its fold.
Add to this, any further reduction of interest rates by RBI (as and when) should aid its bottom line.
Disclosure: invested.
2 Likes
rightly said. The MOSL initiating coverage report on Gruh Finance http://www.motilaloswal.com/Financial-Services/Research/Detailed-Report/Initiating-Coverage/13921/511288
tells how Gruh has decreased its LTV in FY15 over FY14 among other safeguards. It is a good report to read.
I would also give an unsolicited advice that, one has to be careful in looking at NIM. I would say that it is better to avoid looking at it. The formula for NIM in India is not followed outside the country. Let me explain.
NIM = Net Interest Income / Asset = (Interest Income – Interest Expense)/Asset
= Lending Rate – (Borrowing RateDebt)/Asset
= Lending Rate – Borrowing Rate(1-Equity/Asset)
= (Lending Rate – Borrowing Rate) + Borrowing Rate * (Equity/Asset)
= Spread + Borrowing Rate * (Equity/Asset)
NIM mechanically depends on capitalization levels, that is Equity/Asset, and also Borrowing Rate at a given level of interest spread. For example, if Gruh and Repco have same borrowing and lending rates, then Repco would have a much higher NIM because it has much higher capitalization ratio. It is better to look at spread when we are trying to assess gross profitability. Infact it looks like Repco has lower spread and yet higher NIM!
There are problems with Indian definition of NIM that go beyond comparison between Gruh and Repco. For example, consider two lenders called RISKY and NOT RISKY with same Equity/Assets. RISKY lends to somewhat riskier borrowers, and hence, has both lending and borrowing rates higher by 1%. To summarize, both have the same spread and same capitalization levels but RISKY is in riskier lending business. In this example, RISKY will have higher NIM, because it has higher borrowing rate other parameters being the same. I would rather prefer to invest in LESS RISKY who is conservative and still maintains the same spread and the same capitalization ratio, while NIM will point to RISKY.
14 Likes
Gujarat and Maharashtra are worst affected areas in this monsoon. So I think this year will be tough for gruh in growth with respect to Repco.
but still gruh has long history of performance and has weathered all weathers, so it will keep enjoying the current premium valuations.
Disc - Invested in gruh
I have been trying to understand the plan of digitization of land records and its positive effect on property transactions and mortgage loans. It looks like many states have digitized major part of the land ownership records and people can take a printout of the ownership records from the state government websites, although the printouts do not have legal validity yet. The plan is to bring the digitization to a level where the printouts can work as a legal proof of ownership. This would bring down the inconvenience and cost of property transactions and should lead to better business for mortgage lenders like Can Fin and others.
My knowledge of the status of land ownership digitization programme and its possible impact on mortgage loans is rudimentary. Please feel free to share your views.