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LIC Housing Finance Ltd
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Ladies and gentlemen, good day, and welcome to the LIC Housing Finance Limited Q4 FY '20 Results Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Agarwal from Axis Capital Limited. Thank you. And over to you, sir.
[Technical Difficulty] everyone, and welcome to the earnings call. We have with us Mr. Siddhartha Mohanty, MD and CEO; and Mr. Sudipto Sil, CFO from LIC Housing. I would request Mr. Mohanty to give us a brief overview of the quarter gone by, and thereafter, we'll open the floor for Q&A. Over to you, Mr. Mohanty.
Thank you. Good afternoon, and welcome to the post earnings conference call of LIC Housing Finance Limited.As you would be knowing, LICHFL declared its Q4 FY '20 results on Friday, 19 June. Before beginning, I wish you and your near and dear ones good health and hope you are all safe.The key highlights of the results are as follows: revenue from operations INR 4,920 crore as against INR 4,658 crore for the corresponding quarter of the previous year, with a growth of 6%. For the full year, revenue from operations were INR 19,697 crore against INR 17,358 crore with a growth of 13%. Outstanding loan portfolio is at INR 2,10,578 crore against INR 1,94,646 crores as of March '19, reflecting a growth of 8%. Out of this, individual loan portfolio stood at INR 1,96,340 crore against INR 1,81,569 crore. There also growth of 8%. Within the individual loan portfolio, home loan portfolio recorded a growth of 9%. Total disbursements for the quarter were INR 11,325 crore as against INR 17,242 crore for the corresponding quarter in the previous year. Out of that, disbursements in the individual home loans were INR 8,877 crore against INR 11,743 crore. For the full year, disbursements were INR 46,936 crore against INR 53,908 crore with the individual home loan disbursement, INR 37,539 crore against INR 36,912 crore for the year '18, '19. Disbursements in the project loan for the quarter stood at INR 413 crore against INR 2,031 crore. Net interest income for the Q4 was at INR 1,089 crore against INR 1,202 crore. For the full year, net interest income stood at INR 4,689 crore showing a growth of 10%. Net interest margin for the full year stood at 2.34% as against 2.38% for FY '19. Profit before tax for the quarter stood at INR 826.72 crore against INR 986.24 crore, showing a degrowth of 16%. Profit after tax for the quarter stood at INR 421.42 crore against INR 693.58 crore for the same period of previous year. Full year PAT stood at almost similar level, INR 2,401.83 crore against INR 2,430.97 crore for FY '19. And our Board has recommended dividend of 400%.Pursuant to announcement of COVID-19 as a pandemic, normal life and economic activity across the world has been severely impacted. There has been tragic loss of human lives and the numbers are still increasing. There has also been widespread disruption to business activities globally, which will certainly have an impact on the growth of all economies. Since the situation it is still evolving, the impact on the GDP is being assessed. However, it can be definitely concluded that we have not witnessed such impact on the global economy in several decades. For the company, though we had a very good year for the past 3 quarters, there was significant impact in Q4, which coincided with the financial year ending months of March, which has been traditionally a very good and productive month in terms of business activities. As a result, the fourth quarter disbursements were impacted to a very large extent. For the quarter, the total disbursements were INR 11,325 crore against INR 17,242 crore for the same period in the previous year. However, despite all these challenges, the full year disbursements in individual home loan segment still clocked a small growth over the last year and stood at INR 37,539 crore against INR 36,912 crore FY '19. Consistent to our selective approach, the disbursements in the individual non-home loan category were lower by more than 30%. Also, project loans for the year were down more than 60% to INR 2,618 crore against INR 7,128 crore for the FY '19, with Q4 disbursement at INR 413 crore as against INR 2,031 crore. As a result, for the full year, disbursements were INR 46,936 crore against INR 53,908 crore, a decline of 13% year-on-year. During the year, our performance in Pradhan Mantri Awas Yojana continued to be a very strong point with disbursement exceeding INR 11,200 crore for the year. That is more than 25% of the retail disbursement, clocking a growth of 52% with the Q4 disbursement at over INR 3,100 crore. And we continue to be confident of this segment as a growth driver in the coming years. On the portfolio growth front, the total portfolio recorded a growth of little more than 8% and now stands at INR 2,10,578 crore. As mentioned, the overall portfolio growth also got impacted as disbursements in March 2020 were affected. As permitted by RBI circular and grant of moratorium, company offered EMI moratorium to its customers. About 25% in terms of value, moratorium has been granted to the customers. However, in the current month, we have seen many customers who had opted for moratorium coming forth to make EMI payments. And as such, number is trending towards a decline. Also, for the past 2 months, non-moratorium collections stood at around 92%. We have constituted a branch-wise task force to closely monitor and follow up the moratorium cases to ensure that there is a smooth transition to the regular payment once the moratorium period gets over. In terms of asset quality, there has been a marginal increase in Stage 3 exposure at default by 10 basis points from December '19. It was earlier 2.73, now at March, it stands at 2.83. However, there has also been a decrease in Stage 2 and improvement in Stage 1 assets. Total ECL provisions as on 31 March 2020 stood at INR 2,612 crore against INR 1,659 crore as on 31st March '19, after taking into consideration the impact of COVID-19. On the funding side, we have witnessed a reduction in overall cost of funds by 41 basis points during the current financial year and 53 basis points in incremental cost of funds. Net interest income registered a growth of 10% for the year. Net interest margin for the year stood at 2.34% as against 2.38% over the previous year. However, for the Q4, there was a decline since collections were impacted in March and also due to the sequential decline in asset growth from 13% at the end of December to 8% by the end of March. The funding environment and the liquidity conditions continue to be quite favorable for the company. During the quarter under review, we have raised funds through NCDs, bank loans, CPs and public deposits. The outlook on funding cost remains positive as the interest rates are on the decline in the economy. Cost of funds are likely to further decline in the coming quarters. In the ensuing scenario post lockdown, the company moved seamlessly into the BCP and maintained all the regular activities through work from home. As of now, nearly all offices have reopened and are functioning as per extent of guidelines on reopening of business establishment issued by local authorities from time to time. After a pause in April, disbursements have commenced in May and June, and we have experienced good disbursement during last 2 months. It is particularly encouraging that phase loan sanctions have also picked up, and we have also experienced excellent experience for this sanction also. Our newly launched mobile app, HOMY mobile app that was launched in the month of February this year, and has also helped greatly in connecting to our prospects and home loan buyers. This year will post challenges of the like we have never witnessed in past. However, we are confident that we'll overcome all the obstacles and will emerge stronger. With this introduction, I would like to invite you for your queries. Thank you.
[Operator Instructions] The first question is from the line of Sanket Chheda from B&K Securities.
Yes, sir. Sir, my question was on project loans. The disbursement for which in this quarter was around INR 413 crore. But the sequential rise has been about INR 1,000 crores. So where is the disconnect here? So if you see on the slide of disbursement that we report, sir, the Q-o-Q increase in the project loan number in absolute terms is nearly INR 1,000 crores.
So I'll -- yes. So -- good afternoon. See, actually, there is a bit -- the difference is because of the Ind AS number which has been provided this time. There is a difference between IGAAP and Ind AS number. This is the difference because of that. Otherwise, the disbursement is INR 400 crores only for the current quarter. Okay?
Okay. Okay. And sir, on asset quality, now that we have just made about INR 27 crores in this quarter as a provisioning. On Stage 3, our coverage is one of the best, but on Stage 2 asset, we hardly have any provisioning. So what stands behind that? And also, our tax rate for this quarter was 49%. So do you have any light on that?
Excellent. As far as the tax rate is concerned, this is actually, if you look at it during the year, in the month of August, there was a change in the taxation rate. The corporate tax rate had come down. However, the deferred tax assets which was created at a high rate had to be reversed. So now what you have seen is basically the reversal of the deferred tax assets, which was created at a higher rate and now being connected at a lower rate. But if you draw the full tax on a full year profits, then it will now be correctly aligned. Number that is -- as your query on the taxation rate is concerned. The other query you had placed for the PCL provision, right?
Yes. On Stage 2 asset we hardly have any provisioning so...
There has been an improvement in Stage 2 assets from December to March. But if you see the Stage 3 assets, the coverage on Stage 3 asset is probably one of the higher ones in the sector.
Yes, yes. Not as debt, but on Stage 2...
If you remember this December Stage 2, out of INR 2,035 crore, only INR 530 crore moved to Stage 3 in Q4, and INR 1,700 crore -- almost INR 1,700 crore moved back to Stage 1. So in that front, I think there is some improvement. If you compare Q3 and Q4, slight marginal improvement is there.
Yes, sir. My question was that on the revised number, the ratio numbers which stand as of now on that only we have about 15, 16 basis of provisioning. So which stand -- stood very low against the normal -- against the other peers, which have been creating a contingent provisioning pool for the...
Overall provisioning is 34.1%.
See, overall provisioning, the ECL formula for provisioning depends upon the valuation of security and the loss given default on a probability of default. So only that portion of the provision is made at Stage 2, which is certainly assumed to be having a deficient security or irrecoverable.
Okay, sir. Then last question. In last 2 years, like our NPS had moved up from 0.8 to 2.8, mainly we have been taking our project loans and nonretail loans up in terms of growth. But on yield, that has not been -- we have not been witnessing any uptick in yields. There's continuous pressure on yields, and hence, our margins are on continuous headwind. So any color on that? That would be my last question, yes.
No. Sorry. This was regarding the yields?
Yes, yield on loans. So we have been taking our project loans are we to see in last 7, 8 quarters, but there has been no commensurate rise in the yields while we are seeing -- witnessing the rise in delinquencies on project loans. So...
See actually, the reading on the total average yield also has to be taken into consideration the overall interest rate scenario in the economy. So while there has been an increase in the project loans, and in fact, I would say that in the last one year, there has been no change in the composition of project loans per se, it has marginally come down. Also, if you look at it, the share of assets in the non-home loan segment, that is the LAP and the LRD, that has also come down, especially if you see in the fourth quarter and also during the full year. And overall interest rate scenario has been coming down. So yield obviously we'll be in sync with the interest rate scenario.
That's also -- okay. My question was, we are taking...
Mr. Sanket Chheda, this is the operator. Sorry to interrupt you. Sir, I would request you to rejoin the question queue. We have many participants waiting.
Sure.
[Operator Instructions] The next question is from the line of Kunal Shah from ICICI Securities.
Yes. So particularly on margins, I just want to get to that number of 2.1 and relatively lower yields. So just maybe the previous calls, we used to highlight that our collection is mostly in the first fortnight and lockdown started from the second. So how much was the collection impact? How much was the interest reset impact? And how much was the interest reversal impact on corporate NPL in terms of the overall margin sequentially everything from Q3 to Q4?
You see, normally our experience is, the last part of financial year, particularly last week, we -- our collection is almost 15%. So all other things are related to that. So that was heavily impacted because of that. And everything, and normally, if you see this NP accounts also, those which will go to NPA, people just pay 1-month installment, so that 90 days is not there. So that is expense. So that has been impacted heavily because of sudden lockdown. And that has impacted all other things.
No, no. But March collection, any which ways, it could be largely through checks and all. So I'm not sure in terms of how March collection is impacting the margins ideally maybe because it's not again reflecting in terms of say GNPL rise, particularly on the individual side. On corporate, there is rise for individual is still coming off. So I'm not understanding as to how the impact is there on NIMs.
The impact is because of the interest component of the collection. Lot of collection happens, especially because the drive for recovery peaks in the month of March, especially in the last fortnight. And where people also make payments, the customers might still remain in NPA, but there's a lot of amount of collection which happens which goes straight towards the addition towards interest income. So that is what our MD was...
One month has to pay, 1 month to come out of NPA.
So that portion of the collection which generally happens every year, especially in the last month, and more so in the final fortnight, that was completely lost.
No, sir. That should help in terms of the increase which is generally there in Q4. Okay. So maybe that increase is...
That is actually -- that adds interest income. That is a direct addition towards interest income. Mind you, I think you're getting confused between upgrades. I'm not talking about upgrades at this point in time.
No. I'm not confused. I'm just telling you, see, sequentially, okay, maybe if it would have moved up from 2.4 to -- the delta would have been there if we would have collected more. I want to understand, so from sequentially, any which ways, it was not recognized and accounted for in Q3 also. So sequentially, why there should be a dip? Yes.
See, again -- again let me clarify it. See, there are a number of NPA accounts on which generally the payment comes towards the end of the year. It still remains an NPA. So we are not talking about upgrades. So that NPA number may not change, but there is collection against those accounts. You just kindly refer to one data point which I shared in all the last couple of quarterly calls I had shared. Even when -- within the NPA accounts, there is a collection. The accounts have not moved out of NPA. If you recollect, we have shared this number in both the 2 previous quarters. So that number has got impacted. So this has actually nothing to do with the upgradation of the NPA which you are referring to which happens in the fourth quarter. Obviously, that did not happen. But over and above, there is collection which comes in. Even within the NPA accounts, people try to make up as much as they can without maybe materially changing the NPA numbers. That collection impact did not happen.
Okay. And how many loans got reset lower which would have led to decline in yields? So any number which you can give in terms of...
As of now, the number, I would not be able to share off hand. But yes, there has been an impact of that also, but not to that extent in the month of March. The other impact which has led to the decline in the net interest margin is the decline in the overall asset growth, which was 13% as on December and which has come down to 8% by the end of the March. Plus, coupled with it, the change in the mix of incremental disbursals.
Next question is from the line of Mr. Nischint Chawathe from Kotak.
So just 2 questions. First one is really on the leverage side. What is your view on the leverage side? Do you think you need to raise capital up any time in the near future? And I'll come back to the second one.
Actually, if you observe, we are now adequately capitalized. That is our present and there is no such thinking to raise capital. And at appropriate time, our Board will take a call whenever we need. For raising capital, Board will take a call. But as of now, there is no such thinking.
If I may just add to this. If you look at it, the asset growth, which was clocking around 13%, 14%, 15% for the balance part of the year, has come down to 8%. So to that extent also you can say that -- and also, the project loans which consume much higher capital, disbursement has hardly happened this year.
So the rise in GNPLs on a quarter-on-quarter basis were -- all that was on the developer loan side? Or was there -- was it on both developer and retail?
Actually, developer loan, obviously, as usual, it is more...
But what is absolute content of developer loan NPA?
It will be around 17%.
Absolute content, if you can share the absolute number, rupees billion.
500.
2,500.
2,500, 2,600, it will be like that.
Okay. Okay. And then there was some recovery on the individual side?
Yes. Recovery, in fact, developer loan if you see, there has been some degrowth in the total NPA, some few crores, like INR 26 crore or INR 30 crore less in that...
And the increase on the developer NPA from around 9 -- around INR 2,000 crores to INR 2,500 crores for like 1 account, multiple accounts?
No, no, no. It was not INR 2,000 crores. It has increased by around INR 300 crores.
Okay. And this is one or multiple accounts?
No. Multiple, multiple.
Sure. So just 1 finally, if you could give some qualitative picture in terms of where you would see -- what is your visibility on where this goes over the next 6 months. And second one, in terms of any efforts on resolution on some of the accounts, what's happening out there?
Yes. You wanted like a...
I want some outlook on where you see these numbers headed for next 6 months? And I mean are all these customers, are all the developers under moratorium right now? And what is it that you seeing on the resolution of these assets?
Actually, if you observe, this is SWAMIH Fund that has now created this SBI caps, they're managing. We are also -- LIC is also one of the promoters of that fund. There, we have 17 accounts are before them. One has already been resolved. They have already started, I think, maybe disbursement maybe, they are very soon all signing, everything is over. And total 17 cases and around INR 1,100 crore. So if those are being resolved in the current year, so to that extent, we'll get a benefit. So that will be there. And apart from that, some other accounts also, we were following up, but this sudden lockdown, we could not get money. So I am hopeful before September some improvement will be there in those accounts. Some builder book.
And the 25% loans on the moratorium are only for retail or retail developer both?
Total, total.
All put together.
And the breakup between retail and developers?
Yes, yes, yes.
Yes, you want -- sorry? Couldn't hear.
The breakup of customer...
The breakup for the developer will be 75%.
Sorry? 75%?
75%, yes, of the total book size, they have approached for moratorium.
That is 75% total?
Yes.
Okay. And then the -- and the balancing number will be for the retail?
Yes, yes, yes.
Sure. And just one last one, if I can. There was an increase in operating expenses for the quarter. Any specific driver out there?
Yes. There was one item, that is for corporate social responsibility, CSR, a provision of INR 40 crores was made in the other expenses.
The next question is from the line of Prashant Shah from Macquarie.
Nishant here. Actually, I just wanted to let a few data points and just thoughts around those data points. So first, can you give the capital adequacy numbers, Tier 1, Tier 2, et cetera, for the month -- year ended FY '20?
Yes. This capital adequacy number as per convention, it has to first go to NHB. And once it goes to NHB, only when we disclose it. So it will be put up officially maybe in a couple of days. Apart from that, I can just -- directionally, I can -- we can share that Tier 1, by and large, will remain wherever it is. Tier 2, we had exercised the call option on INR 500 crores of Tier 2 in the month of March, through that exercise it will come down. Otherwise, directionally, it will -- I mean as far as Tier 1 is concerned, it will remain wherever it is.
Right. And absolutely, no thoughts on any capital raise. Did I hear that right?
No, didn't hear you.
No. So there's no thoughts around any capital raise at this time right?
At appropriate time, we'll take a call. As such, if you see NHB -- as per the NHB provision, NHB decided at 2020 13% CAR should be there, 2021 March 14%, then 2022 15%. So we are well above that. So we are maintaining that balance. So at present, there is no such thought. But at appropriate time, we'll take a call.
Okay. And just clarifying on this one data point. I think you mentioned that NPLs in the developer segment are at around 17%, so roughly INR 2,500 crore. Is that right?
Yes. Yes.
Okay. Okay. One -- couple more smaller questions. So there's a negative other income recorded this year of about INR 33 crores this quarter. So what would that be?
So that is actually -- if you look at it, it's a revenue neutral item. You would be aware that we had done an external commercial body in the month of December. As per the Ind AS and the Institute of Chartered Accountants guidance notes, any foreign exchange fluctuation will have to be recorded.However, this is a fully hedged facility. So the corresponding entry will be categorized under OCI, that is other comprehensive income. So it is a neutral entry. There will be an entry at the income level and also at the OCI level.
Okay. Fine. Fair enough. And just one last question. I think one place, in the press release you had mentioned that there is a little bit of difficulty in trying to figure out what the COVID-related provision should be, like if you look at...
It is not -- you said that the impact of COVID on business. So if you look at the published accounts, it is very clearly mentioned that the impact of COVID has also been taken into consideration while arriving at the ECL. If you look at the published audited accounts and the notes to account, it is very clearly mentioned in, I think, point #6 or #7, I cannot recollect exactly.
Correct. Fair enough. So my question actually is that like most other NBFCs, HFCs have taken some bit of like additional conservative like provisions. Do we intend to do that in the next quarter? Or how do we think about this? Are you just comfortable with the current coverage levels?
Yes. There have been some 4 different COVID scenarios which have been adopted and which have been put into the ECL models while arriving at the provisioning. Now you have to understand that the ECL or the expected credit loss has to do with the dilution and security value of the assets, which is also linked to the loan-to-value ratio of the portfolio. So now if you look at it, traditionally, even at the stage of sanctions, the loan-to-value ratio is less than 50%. On the portfolio, it is much less in the 40s. So the security value dilution has been applied vis-a-vis the COVID scenarios. Four different scenarios have been applied, plus the normal 3 scenarios, and we have gone with the most conservative of them, which has given this output of the ECL. Now if you look at the Stage 3 provisioning for the ECL, for our company, it is one of the highest in the sector.
44%.
44%.
The next question is from the line of Mahrukh Adajania from Elara Capital.
I just had a follow-up question on margins and on the moratorium. Firstly, on the moratorium. The moratorium numbers are as of end May, is it?
Yes. Up to debt term.
Okay. So what has been the experience in June? And could you separately specify what the moratorium on core housing and on LAP was?
You see, our experiences as of June, people who have taken moratorium, they have started paying. Those who have opted for moratorium, they have already started paying some of them. And roughly around 20,000, 21,000 accounts who opted for moratorium, they are paying. So June onwards our collection is also going up. That is one good sign. Despite this uncertainty about the duration of pandemic, some growth we are experiencing. And coming day, I feel -- because now people are very clear, moratorium means they have to pay interest on that amount too. Though court case is pending, Supreme Court will hear it in August, but people have understood that this EMI deferment is will a cost. So people who can afford, they are paying.
So this 25% number would have come down by how much?
25% is the amount. Number will be much less. I think it 15%, 16%, the number.
So this 25% of amount that would have come down by how much in June?
That, we'll exactly assess because the 21,000. If you see number-wise, 21,000 people, they have opted out of moratorium, they have started paying.
Okay. And sir, how much was the retail moratorium separately for core housing and for LAP?
That is around 13 -- 12% to 13% only individual housing loan.
And LAP would be?
That is around 35%.
32% to 35%.
Okay. And in margins, you said that NPL interest -- collection on NPL interest did not happen in March because of the lockdown. So this is only end March? Or it happens every end quarter? And if you could ...
Only financial year ending. Our experience is last part of March, last fortnight, last 10 days, 15% collection every year we get. Around 15%. So that has been greatly impacted. So that has also had impact on all other financials.
Got it. And what is the interest reversal in 4Q versus 3Q?
What reversal? Sorry.
Interest reversal, interest income reversal in the fourth quarter versus third quarter?
Reversal here.
Reversal, there is no reversal.
No reversal.
No, no. There is no interest in the reversal.
See I am not able to understand. What reversal?
Interest income reversal on NPLs.
No, there is no ...
No, no, no.
The next question is from the line of Bhaskar Basu from Jefferies.
Yes. Just a couple of questions. Firstly, a follow-up on moratorium. Just wanted to understand this 25%. How would that have moved over the last few months? So 25%, as I understand is currently. What was this, say in April and May? And any changes you've made to the moratorium norms? That's my first question. Secondly, how much -- I mean, what would have been your provision had you not built in this additional stress which you mentioned is already incorporated in your provisions? Because sequentially, I mean we've seen really your provision companies going down at Stage 3 level.
That will be around INR 80 crore -- INR 79 crore to INR 80 crore. And so far as the moratorium is concerned, the moratorium -- actually going down, amount-wise if you see since I told we have collected 21,000 accounts, they are paying who have opted for moratorium. So amount-wise, whatever was initially under moratorium as per RBI, total RBI guidance we are following. So that amount is also coming down moratorium. Only thing is that we are now more concerned when this period ends. So how to bring all the accounts back on track? So that is of more concern now. So those who have opted for moratorium, they should not slip into NPA. So that is the biggest concern. And consciously, we are now working and our teams after that, all moratorium accounts, they are closely monitoring.
Okay. And what would be the amount of assets which would have probably slipped had there been no moratorium as of March end?
Yes. Had there been no moratorium, this is the same amount, 25% people have opted means they might be under stress, it will be less, less amount would have slipped. Exact quantification we cannot...
That is very difficult because people started applying for moratorium initially and then they withdrew also out of moratorium. So that is not a very accurate...
As of March, end March, because...
As of March only, 27th March, people -- the RBI had come out with a moratorium announced, no? It was in March only when the announcement came. So this is a very difficult number to actually -- it will be just speculation.
Okay. And what's your thoughts on the project segment in terms of how do you see that going forward once? I mean, obviously after -- this quarter, obviously, has been impacted by lockdown. But in terms of disbursal, we have already seen a big decline last year. What is the strategy there?
Yes, yes. Project -- if you say project, we are not going in general for funding all projects. We are very, very specific projects in which units can be sold. And in today's context, if you see, only affordable segment, mid-segment, there is market and there is also demand. And in my experience post-COVID, last 1.5 months this -- after May 20 to till now, that this segment, particularly affordable segment, mid-segment, we are experiencing some good growth. So projects which cater to this segment, definitely, we'll be funding those projects, looking to the viability and mainly the sale velocity, what will be the sale of velocity. So that is first and foremost. And at this segment, there will be always a demand. In coming days also, there will be demand. But so far as luxurious premium segment, I have my own doubt, very difficult because already inventories are lying vacant in cities like Mumbai, big places, big, big, INR 5 crore, INR 6 crore, INR 8 crore apartments lying vacant. So those will be very risky option for us.
Okay. Just to clarify, I mean, last year, I think the strategy was to not give any incremental disbursal in this segment. So whatever was sanctioning was being disbursed?
In fact, heavy loss in projector segment, we have done very, very degrowth, high degrowth.
The next question is from the line of Viral Shah from Credit Suisse.
This is a question for Sudipto. So Sudipto, under Ind AS, now there is no interest income reversals, right, on NPAs. Essentially, you recognized it on a net [ sale ]. So I'm not able to reconcile as to how does this have an impact on the margins in the fourth quarter. If you could help me with this?
Margins?
Yes. You mentioned...
The margins, I think that time what I said, there are 2 distinct points that I shared. Number one is that there is collection actually which happens, interest income collection which happens on the NPA accounts. Physical collection of the dues where there is no change in the DPD. So that is a clear collection which has not happened. We cannot accrue that. Number two is that there has been a decline in the overall asset growth from 13% at that point in time in December to 8%. So when there is a decline in the assets, growth, obviously, this will have an impact on the revenue generation. The thirdly what we also mentioned is that there has been rewriting on that -- on some of the accounts, from a higher rate of interest to a lower rate of interest as a retention strategy. It is not -- I didn't mention anything about Ind AS.
No. So basically, essentially, you can correct me if my understanding is wrong, that on Stage 3 assets under Ind AS, you did not have to collect the interest actually. You can accrue it, recognize the interest on net Stage 3 portion. So in our case, it would be at a 67% of Stage 3 assets, actually -- no sorry, 57% post your PCR on Stage 3 assets. You can accrue interest say on that much assets which are there. Is my understanding wrong?
I think it is slightly different actually, slightly different.
Okay. Maybe I'll take this off-line.
Yes. We'll discuss. Yes.
The other question I had was on the OpEx front. You mentioned that you had a CSR expense of INR 40 crores in this quarter. But I believe that this is something which would have been there in the base as well, right?
No, no, no. Last year, it was not there. Baseline neither.
The next question is from the line of Subrat Dwibedy from SBI Life Insurance.
Just wanted to know what will be the bond issuances in H1 and H2? That is first question.
Yes. See, bond issuances, actually, we have started issuances. Friday only, we have closed one bond. At this point in time, we will not -- we don't like to share the number. But certainly, now the bond deals have started coming down significantly. In fact, we have very recently done a 3-year issuance at less than 6%, at 5.9%. So it looks good. The liquidity is very good and we will be coming with various tenors.
Okay. But any sense on how much will be the borrowing plan for the year?
Yes. Borrowing plan will have to be recalibrated looking at the disbursement overall what we have planned initially and what likely is going to happen. This year, we'll have to recalibrate it. Maybe in a few weeks from now, we will have a better -- a clearer picture once the entire lockdown stuff is removed. But it will be more or less in sync with whatever it was last year.
Okay. And secondly, on this project loans, you mentioned the Stage 3 is 17%. What will be the Stage 2 there?
Yes. Stage 2 for projects will be 2.5%.
Okay. Okay. Great. And one last thing. In your LAP book, these are -- how much will be the self-occupied premises which are mortgaged?
Majority. I think more than 95% will be self-occupied.
The next question is from the line of Kaushik Agarwal from Haitong Securities.
Sir, I have 2 sets of question. Sir, can you please give Stage 3 number for individual bifurcation into home loan and LAP segment? And my second question is, recently, we have seen some rate cuts in the loan which you provide. So how is that -- how is the demand being evolving? And in which region are we seeing some pickups in demand?
You see, individual retail Stage 2 is just 4.79%, the individual retail. And as project already told, 2.5%.
Okay. Okay. Yes. And sir, about the demand?
Demand. Home loan demand.
Home loan demand, as I told, this affordable segment, mid-segment, we are experiencing good demand in retail side, and in Tier 2, Tier 3 cities also.
See, there has been some distinct pickup in the month of June after a pause in April and middle of May onwards it started picking up. But June the first fortnight, fresh sanctions, nearly INR 2,000 crores we have done. So that is a very encouraging sign because these are all fresh sanctions. And total disbursements that we have done till now is almost INR 2,000 crores. A bulk of which has come in the last 15 days. So it's opening up. Situation is improving a little bit. Slowly, slowly, it's opening. So hopefully, things should -- as mentioned, the affordable and mid-housing segment, the demand will continue to be reasonably good.
Sir, one last thing. This INR 2,000 crore disbursement which you just said is in Tier 2 and Tier 3 cities, right?
Mostly, mostly. Across. Across, but mostly Tier 2 and Tier 3 city also experiencing good growth.
The next question is from the line of Vihag Mishra from Kotak Mutual Fund.
My primary question is on the yield segment-wise. What is the yield right now for each of the segments, retail loan, LAP and developer incremental?
Incremental yield in the retail portion ex of the LAP and others will be in the range of around 8.3%, 8.4%. All categories of loans put together in terms of annualized. As far as the LAP is concerned, it will be closer to 10%, 10.5%. Builder loans, very little builder loans have happened in this current year. But mostly, I feel that should we do a loan, it should be a good quality loan, 12% to 13%, you can take.
Okay. Sure. And the next question is how is the ALM profile looking like for next 6 months to 1 year? Just can give some color on that.
ALM is actually quite comfortable now. In fact, it is better than what it has been for many, many quarters because we had actually completed the last year's borrowing in the month of February itself. And all through March, we were buffering up for disbursement which did not happen. So to that extent, you can also see in our closing balance sheet the amount of cash that we were holding, which is one of the highest. Further, fresh bank lines have also come in. And from last week, we have started hitting the bond market also at very good levels. So ALM looks quite healthy.
The next question is from the line of Amit Ganatra from HDFC Asset Management.
Yes. I just had some small clarification?
Mr. Amit, please increase the volume of your phone.
Yes. I had one small clarification. See, this Stage 1, Stage 2, Stage 3 assets classification, that has been done as of Feb 29 or that has been done as of 31st March?
Year-end.
So now suppose if a customer became an NPA but he opted for a moratorium, then where does it get categorized?
It will NPA only. As on 29th February, if it is NPA, that will continue to be NPA, we have taken into account.
That's what. So as of 29th Feb, right? So anything that was...
Yes. Those who are prior to March past which were NPA, those will continue to be NPA.
So in that sense, Stage 3 that we are seeing is as of 29th Feb classification, right?
Yes. We have taken all the NPA, 29th -- before 29th, those will continue. If they're NPA before 29th -- as on 29th.
The next question is from the line of Manoj Bahety from Carnelian Capital.
I have a couple of question. First one is, like if I see at the moment of our portfolio the way our project loans are coming down and individual portion of loans going up. Secondly, if we see the incremental yields even from banks, the way the competition from the banks is going up in this segment. Thirdly, definitely, the interest rate benefit which is coming to us also because of excellent liability franchisees which we are having. If you club all these 3 elements together and if you would like to see your NIMs and spreads going forward, so how do you see your NIMs and spreads going forward? That is one. Secondly, what will be the strategy? Like if we are -- the project portion of our loan book is going down, what will be the strategy going forward to maintain our spreads and NIM level?
You see, obviously, project loan and other things, consciously, we are now focusing more and more on retail loan. And as you're told, retail loan means margin is less. But our focus will be retention of loan book so that lower slippage is there, lower NPA is there. So that at least through retention, if NPA is less, then also we can make something. And project loan, we are not totally stopping. We'll give good project loan where sale velocity is there, that fellow can be able to sell units and pay back our loan. Affordable segment and the mid-segment, that will also be there. And cost of funds -- since cost of fund is going down. And we are now going more and more technology way, we are not going for massive recruitment. That will not be there in coming days. So we are there to control our cost. All expenditure, unnecessary expenditure and cost, there will be control on that. So all these things, if you take together -- because we are in competition. We have to make some margin in a competitive way because the interest rate is also competition. Today, we are giving home loan at 7.5% interest. And the renewal home loans also we have allowed them to rewrite at 8.5%, which was earlier 9.5%, 9.7% at a different time. We have also allowed our customers so that they are retained with us. They do not go through banks and other institution. As I told, the competition is there. So to retain the books, so we have also given that facility to our customers. So taking into account all these things, I think we'll be able to make margin -- whatever margin you are seeing today, definitely, at least to stabilize or some improvement will be there by March 2021.
So sir, if I got it right, essentially, what they are saying, even if there is a dip in NIM and spreads, that will be taken care by low credit costs and saving on OpEx, right?
Yes, yes. To some extent.
Yes, yes. And sir, second question is mainly on asset side. Couple of questions there. First one is like if we see our LAP book, even individual retail LAP book, is there some LRD portion there in retail LAP?
Yes, yes. LRD is also there in LAP.
And sir, so any color you would like to give, like considering the force majeure clause, with these guys, it has completely stopped their cash flows. So how you are seeing that segment? And what kind of stress you are seeing in that book? Firstly, sir, how big is that book out of 17%, the LRD book?
LRD is around -- 10% is LRD. So -- and particularly new LRD cases, we are very, very careful, because looking into present situation, we are more careful. In fact, we have -- for the time being, we have kept it on hold.
Okay. So INR 3,500 crore is existing LRD book?
Roughly, less than INR 4,000 crore.
Okay. Any color on stress testing on that book? Like how do you see that book?
See the LRD here also, which we have taken around INR 4,000 crores. There also, we have applied certain at the time of sanctions itself, the SOP requires that there will be some kind of a buffer built in vis-a-vis the rental income to factor in for vacancy risk. That vacancy risk is taken into consideration. Secondly, the loan-to-value is very stringently maintained at 50% to 60% max, so there is adequate security cover there. Lastly, on top of that, obviously, all the rentals are secured through Escrow. Plus, we also take about 2 to 3 months of EMI as DSRA, debt service coverage. So all those things are actually standard SOP, not for now, but at the very beginning, right from the beginning of introducing this product.
Okay. Okay. So as of now, you don't see any kind of much higher stress on this part of the book, right?
See, actually, if you look at it, that -- the people who felt that they have got some challenges have applied for moratorium and they have been granted moratorium also. So the advantage of that is that they have been able to preserve cash flows for 5 to 6 months. It is not that the rentals have come to 0. It might have reduced, but it has not come down to 0. So this 5 -- this 4 or 5 months of moratorium that they have received will help them conserve the cash flow and improve their position.
Okay. Got it. Sir, one last question I have. On our developer book, if you can -- I think you have mentioned that the Stage 3, Stage 2, Stage 1. So if you can give a breakup of between GNPA Stage 3, Stage 2 and Stage 1, especially of our developer part of the book, that will be helpful, sir?
Developer Stage 1 is INR 11,322 crore, and Stage 2 is INR 362 crore and Stage 3 is 2,530 crore.
INR 2,500...
30 crore, 30-point something. Yes.
Ladies and gentlemen, due to time constraint, we'll take this as a last question. I would now like to hand the conference over to the management for closing comments.
So thank you very much. And at this unprecedented time, all of us should have a positive approach. And LIC Housing Finance is already addressing the issues post-COVID. And we are confident that in coming days, we'll definitely fine-tune all our operations to meet the challenge. And this year, we'll post, which we never expected earlier, this year, definitely, we'll show our best and already work has started on technological front. LICHFL has taken many initiatives and it will be a totally technology-driven company. And the cost and other fronts, already we have discussed. So I can assure my investors that in coming days, you will find all the positivity in LICHFL. Thank you. All the best. Take care.