CARE assigns 'AAA' to NCDs of LIC Housing Finance
CARE has assigned “AAA” rating to the proposed non-convertible debenture programme of LIC Housing Finance aggregating to Rs 2,000 crore. CARE has also reaffirmed AAA rating to outstanding NCDs of Rs 1995 crore.
MUMBAI: CARE has assigned “AAA” rating to the proposed non-convertible debenture programme of LIC Housing Finance aggregating to Rs 2,000 crore. CARE has also reaffirmed AAA rating to outstanding NCDs of Rs 1995 crore.
Instruments with this rating are considered to be of the best credit quality, offering highest safety for timely servicing of debt obligations. Such instruments carry minimal credit risk.
The rating factors in the shareholding of Life Insurance Corporation of India in LICHF and LIC’s demonstrated support in the past in marketing, administration and funding of LICHF. The rating also considers LICHF’s track record and good market share in the housing finance sector, adequate capitalisation levels, comfortable liquidity position, low operating costs and improving asset quality. However, LICHF faces challenge of maintaining profitability and asset quality in a very competitive business environment.
LIC Housing Finance was promoted by Life Insurance Corporation of India in 1989 with the objective of venturing into housing finance business. LIC continues to be the single largest shareholder in LICHF, with around 40 per cent shareholding. LICHF has over Rs 17,000 crore of outstanding portfolio of individual housing loans.
LICHF’s disbursements grew by 5 per cent year on year from Rs 4,900 crore in FY06 to Rs 5121 crore in FY07. Though disbursements under the project/developer loan segment were low earlier, LICHF has increased its disbursements under this segment in FY08. LICHF recorded growth rate of 25 per cent in total income in FY07 to Rs 1590 crore. This growth in total income was aided by a corresponding 26 per cent growth in interest on housing loans, both on account of 19.58 per cent increase in housing loan portfolio to Rs 17563 crore on March 31, 2007 as well as hike in lending rates by LICHF during FY07.
Increase in interest income has been offset to a certain extent by increase in its borrowing cost resulting in marginal improvement in interest spreads. The operating efficiency of the company continues to be good as the ratio of operating expenses to average capital employed continues to be around 0.66 per cent. Return on net worth has improved from 17.61 per cent in FY06 to 20.52 per cent in FY07 with increased profits.
Instruments with this rating are considered to be of the best credit quality, offering highest safety for timely servicing of debt obligations. Such instruments carry minimal credit risk.
The rating factors in the shareholding of Life Insurance Corporation of India in LICHF and LIC’s demonstrated support in the past in marketing, administration and funding of LICHF. The rating also considers LICHF’s track record and good market share in the housing finance sector, adequate capitalisation levels, comfortable liquidity position, low operating costs and improving asset quality. However, LICHF faces challenge of maintaining profitability and asset quality in a very competitive business environment.
LIC Housing Finance was promoted by Life Insurance Corporation of India in 1989 with the objective of venturing into housing finance business. LIC continues to be the single largest shareholder in LICHF, with around 40 per cent shareholding. LICHF has over Rs 17,000 crore of outstanding portfolio of individual housing loans.
LICHF’s disbursements grew by 5 per cent year on year from Rs 4,900 crore in FY06 to Rs 5121 crore in FY07. Though disbursements under the project/developer loan segment were low earlier, LICHF has increased its disbursements under this segment in FY08. LICHF recorded growth rate of 25 per cent in total income in FY07 to Rs 1590 crore. This growth in total income was aided by a corresponding 26 per cent growth in interest on housing loans, both on account of 19.58 per cent increase in housing loan portfolio to Rs 17563 crore on March 31, 2007 as well as hike in lending rates by LICHF during FY07.
Increase in interest income has been offset to a certain extent by increase in its borrowing cost resulting in marginal improvement in interest spreads. The operating efficiency of the company continues to be good as the ratio of operating expenses to average capital employed continues to be around 0.66 per cent. Return on net worth has improved from 17.61 per cent in FY06 to 20.52 per cent in FY07 with increased profits.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
