Crisil sees more organic consolidation
The pandemic’s third wave could shave off 100-200 basis points (bps) from asset growth at Housing Finance Companies (HFCs), Crisil said in a report.
“The third wave of the COVID-19 pandemic could slash as much as 200 bps off … [the] base case estimate of 9-11% compound annual growth rate (CAGR) in the assets under management (AUM) of HFCs for fiscals 2022 and 2023,” the rating agency said in the report.
It said growth would still be higher compared with average of 2% over fiscals 2020 and 2021 though slower than the broad-based 24% logged between fiscals 2011 and 2019. That period had seen a near twofold increase in the number of HFCs fuelled by easy availability of equity and debt capital.
“Growth this time around will largely stem from players with better credit profiles,” Crisil said. “Organic consolidation, which started in fiscal 2019, will continue,” it added.
Of the total HFC AUM of Rs 13.2 lakh crore as on March 31, 2021, home loans were the largest segment (71%), followed by wholesale loans (18%) and loans against property (LAP; 11%).
Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, Crisil Ratings said, “Home loans will be the fastest-growing segment, as lenders continue to be selective in the non-housing segment (comprising wholesale and LAP loans).”
“After relatively low growth in recent years, the home loan segment is expected to clock 12-14% CAGR over fiscals 2022 and 2023. This will be driven by improving sales, better affordability, and a preference for home ownership and larger homes,” he said.
“That said, the pandemic’s third wave could shave off 100-200bps of this growth depending on its spread, intensity and duration,” he added.
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