Bajaj Housing Finance increases construction financing to around 16% of AUM

Rave News

Mumbai: Bajaj Housing Finance, in its first quarterly earnings call since listing on September 16, said its construction finance business now accounts for 11.7 per cent of its assets under management (AUM) and mainly serves as a conduit for its home loans. Management said the goal is to increase that share to about 16% of the product mix.

Optimistic about rental discounts

The housing financier is also bullish on the lease rental discount (LRD) business, which it plans to continue growing steadily. An LRD is a term loan for a property that generates rental income, allowing the owner to leverage the rental income to obtain higher financing. This model is mainly popular in commercial real estate.

“We remain bullish on LRD as it has always been a low-risk business and a scale business that can deliver the best returns. The risk is very low considering the choice of customers.

As of September 30, pure-play home loans accounted for 57.2% of the company’s total portfolio, leasehold loans accounted for 19.6%, property loans accounted for 9.8%, and construction financing (also known as developer financing) accounted for 11.7%.

Bajaj Housing’s Loans Against Property (LAP) are mostly targeted at self-employed customers who may take loans based on industry, growth capital or working capital needs of small and medium enterprises.

Given that the average note amount for this segment is approx. $8 million to $One crore rupees, they added.

In contrast, leasehold rental prices tend to be at the upper end of the spectrum consistent with the company’s target properties and customer base, they said, adding that this was based on the borrower’s “self-declaration.”

This comes after the Reserve Bank of India (RBI) recently issued a warning about certain unethical lending practices in certain areas of mortgage lending, including lack of proper monitoring of the end use of funds and high interest rates.

For Bajaj Housing, loan interest rates for the home loan portfolio are currently around 8.8-9.2%, LAP around 10-10.5%, lease rental discounts at 8.5-9% and developer financing at 11.5-13%.

The home loan company posted a net profit of $The number in the July to September quarter was 546, an annual increase of 21%. Net interest income increased 13% year-on-year $713 crores.

Lender’s AUM breaks through $Touching the 1 trillion mark $As of the end of September, it was 1.03 trillion, an annual increase of 26%. Home loan AUM grew by 24%, real estate loan AUM grew by 18%, LDR grew by 28%, and developer financing increased by 56% year-on-year.

Loan disbursements for the quarter were $12,014 crore, just shy of the historical spending record $The company said revenue of Rs 12,154 crore in the same period last year was mainly driven by “several large transactions in the commercial business”.

Loan losses and provisions for the quarter were $5 Crores, less than $180 million in the same period last year. As of September 30, corporate governance and macroeconomic coverage $440 million rupees. The third-stage asset provision coverage rate is 58%.

As of the end of September, the gross NPA (non-performing assets) ratio deteriorated slightly to 0.29% from 0.24% a year ago, and the net NPA ratio also declined slightly from 0.09% to 0.12%.

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