BENGALURU (Reuters) – India’s LIC Housing Finance reported a fall in first-quarter profit on Friday, as higher borrowing costs offset gains from steady home loan demand.
The company, a unit of Life Insurance Corp of India, said its profit after tax for the three months ended June 30 fell nearly 2% to 13 billion rupees ($155.3 million).
Home finance companies have seen strong demand for home loans on hopes of a rate cut later in the year, but higher borrowing costs impacted LIC Housing’s bottomline.
The company expects that a gradual downtrend in interest rates will further accelerate demand in the sector this year.
“Following the technology upgrades and organizational restructuring, we are now fully equipped to aim for faster growth especially in (the) individual housing loan segment,” the company said in a statement.
The home financier’s total loan disbursements jumped 19% to 129.15 billion rupees in the first quarter from a year earlier, while finance costs rose 6%.
Its net interest margin, a key gauge for profitability, shrunk to 2.76% from 3.21% a year earlier.
Net interest income, the difference between interest earned and paid, fell about 10% to 19.89 billion rupees.
Rival PNB Housing Finance reported a near 25% rise in first-quarter profit last week, helped by steady demand for home loans.
Shares of LIC Housing Finance ended 1.2% lower ahead of the results.
($1 = 83.7260 Indian rupees)
(Reporting by Dimpal Gulwani in Bengaluru; Editing by Shinjini Ganguli)
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