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Monetary Policy: Reforms hold the key

Jan 28, 2014

Equitymaster describes the Third quarter monetary policy review

Housing finance: Boom or bust?

Nov 3, 2006

The rapid growth of the mortgage industry in India in the recent years has raised concerns about its sustainability and implications on the country's financial and macroeconomic stability. The IMF, in its World Economic Outlook, 2003 indicated that output losses after real estate crashes in developed countries have, on an average, been twice as large as those after stock market crashes, usually resulting in lasting recessions.

LICHF: A shift of focus…

May 16, 2005

The mortgage to GDP ratio (ratio of outstanding home loans to GDP) in India has notched a percentage gain and has risen to 3% in FY05 as against 2% in FY04. In Pakistan, it is less than 0.5% and in other countries of South Asia, mortgages as a percentage to GDP are almost insignificant. As against this, this ratio for the US stands at over 51%. Nevertheless, even if one were to benchmark with more comparable counterparts, the ratio ranges between 15%-20% for South East Asian countries. The penet

HDFC: Will the story sustain?

Mar 30, 2005

While the home loan market continues to grow at a CAGR of 25%, the tax sops (on interest as well as loan repayment) provide a further trigger to the same. Notwithstanding an upward bias in interest rates, if the non-food credit growth has to sustain, it has to be on the back of strength in the housing finance industry. This is further vindicated by the fact that of the total non-food credit growth witnessed during 9mFY05, retail loans, which account for approximately 40% of the total non-food di

HDFC: ‘Shelter’ing growth

Dec 31, 2004

Considering the shortage of 19.4 m dwelling units and an estimated outlay of Rs 7,200 bn by 2007 for the housing sector (as per the Tenth Plan), the housing finance market is certainly on the springboard for a giant leap. Thanks to the burgeoning middle class population and government’s generosity regarding ‘housing loan ‘ tax sops, home loan finance is here to stay. The following graph gives a snapshot of the growth in housing finance industry over the last few years.

Housing Finance: An opportunity knocking?

Dec 22, 2004

Macroeconomic stability (or instability) and performance of the housing sector are inextricably linked. However, in contrast, while economies in South Asia have performed strongly in recent times, the consequent effect of this growth has failed to filter down to the housing sector. In India, which is the one of the most advanced economies in South Asia, the mortgage to GDP ratio (ratio of outstanding home loans to GDP) is estimated at 2%. In Pakistan, it is less than 0.5% and in other countries

LICHF: Showing performance

Nov 11, 2004

LIC Housing Finance Limited (LICHF) had announced its September quarter results sometime back. The company has reported a healthy financial performance in the September quarter, reporting topline and bottomline growth of 5% and 27% respectively, on a YoY basis. While the topline growth has been tempered compared to its earlier quarters, the bottomline growth has been encouraging. Similar results have been reported for 1HFY05. Strong improvement in operating margins, due to control over interest

IDBI: All left to the merger

Nov 10, 2004

IDBI, the largest developmental finance company, had reported its full year FY04 (extended to 18 months) results yesterday. The bank's performance is not comparable with its FY03 results, however higher provisioning and stable operating margins have been the main highlights of the bank in the 18 month period ending September 2004, compared to FY03. On the other hand IDBI's topline saw sustained pressure as its September quarter results indicate. While topline fell by over 11% in the September qu

HDFC: Meeting investor expectations

Oct 25, 2004

HDFC, the leading housing finance company in the country, has announced its September quarter results. The company continues to post healthy growth in its bottomline on the back of strong improvement in net interest income as well as improvement in operating margins. Topline growth also continues to remain healthy.

HDFC: Will it maintain growth?

Jul 19, 2004

HDFC, the largest housing finance company in the country, has reported a strong 22% growth in its bottomline for 1QFY05, while its topline has grown by over 5%. A fall in interest expenses (consequently improving operating margins) has been the main reason for the improvement in bottomline. The improvement in operating margins has been achieved despite strong rise in operating expenses.

HDFC: Growing predictably

Oct 13, 2003

HDFC, the housing finance major, has reported September quarter results in line with expectations. It has announced a 22% net profit growth on the back of a 4% growth in topline on a YoY basis. The bottomline growth has been aided mainly by a fall in interest expenses (consequently improving operating margins). The improvement in operating margins has been achieved despite strong rise in operating expenses.

LICHF: Slowdown apparent

Aug 14, 2003

LIC Housing Finance Limited (LICHF), the second largest housing finance company in the country, had reported a rather lackluster performance for 1QFY04. The company achieved a topline growth of 2%, while it reported an almost flat 1% rise in its bottomline for the June quarter. Operating margins have, however, fallen significantly in this period.

HDFC: Maintaining momentum

Jul 18, 2003

HDFC, the largest housing finance company in the country, has announced a 22% net profit growth in the June quarter. Topline growth has however disappointed, growing by a marginal 3% during the same period. Bottomline growth has been mainly aided by significant improvement in operating margins (up 420 basis points).

IDBI: Topline disappoints

May 8, 2003

IDBI, has reported lackluster topline numbers for FY03. However the financial institution (FI) reported improvement in operating margins, thus helping reduce the fall in net profits. For FY03, the FI has reported a 5% fall in bottomline on the back of a 6% fall in topline. Operating margins, on the other hand, have improved considerably by nearly 600 basis points.

HDFC: Competition blues

May 7, 2003

HDFC, the largest housing finance company in the country, announced its FY03 results which showed a 19% growth in bottomline while its topline grew by a lower 10%. For 4QFY03 the company reported a 16% growth in bottomline while its topline grew by 9%. While it would seem that the topline and especially the bottomline growth has slowed down, we must point out that compared to its earlier quarters, its performance in 4QFY03 must be considered in light of a higher base. The company has also report

Housing Finance : Industry in transition

Feb 8, 2003

If one were to study the sector-wise performance over the last five years, the housing finance industry has outperformed everyone’s expectations. Loan disbursals have grown at a CAGR of over 35% in the last five years. But the industry is still fragmented with a large number of players spread across different parts of the country. There are nearly 383 HFCs or housing finance companies in the country currently. This is apart from the numerous banks that have entered in to the fray. In this articl

Asset Reconstruction Ordinance: Will it help?

Nov 23, 2002

One of the main economic concerns of the government has been the high level of NPAs (non performing assets) in the Indian banking system. Estimates suggest that net NPAs surmount to Rs 300 bn in the banking sector. Reforms to reduce such high levels have been mooted since the time the first round of economic reforms was initiated in 1991. Numerous deliberations and two Narasimham Committee reports later, the government has finally passed the Securitisation and Reconstruction of Financial Assets

HDFC: Under control

Oct 17, 2002

Housing Development Finance Corporation Ltd. (HDFC), which reported slight decline in topline growth during the first quarter has seen second quarter numbers come in higher. Operating profits have increased by 30%, which has lifted pre-tax earnings.

LICHF: Margins on an upswing

Aug 16, 2002

LIC Housing Finance (LICHF) continued to record stellar performance for the quarter ended June 2002. The company's profits grew by 32% on the back of a sharp rise in operating margins and lower operating costs. Its interest income also witnessed a healthy growth of 12%.

Mortgage Backed Securities: An introduction

Jul 27, 2002

With the meltdown in global stock markets, investors are wary of parking their funds into equities. Corporate accounting concerns are among the major worries for investors today. This has led to a sharp increase in volumes of debt markets, which are considered to be safe havens in such situation. Indian debt market has also seen a sea change over the last one year. One such change is the new crop of mortgage-backed securities issued by housing finance companies (HFCs).


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