Tag: housing loans

Home loans defy Covid blues

Banking & Finance

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If the home loan portfolios of major banks, as reflected in the first quarter numbers, is any indication, Covid-19 has not deterred home buyers.

A comparative analysis of housing loan data of banks for the first quarter shows a significant increase ranging from six per cent to about 14 per cent compared with the corresponding quarter of the previous fiscal.

For State Bank of India, the home loan portfolio increased 11 per cent to ₹5,05,473 crore in the first quarter of the current fiscal ended June 30, 2021, constituting 23 per cent of the bank’s total domestic advances compared with ₹4,55,443 crore in the year-ago period. That Covid did not impact demand for home loans is also evident from the fact that in the previous year (FY20-21), SBI posted only a 10.72 per cent growth in the segment.

SBI is not alone. Canara Bank’s home loan portfolio, too, increased 13.15 per cent during the period at ₹65,136 crore. In the previous year, the growth in portfolio was only 10.6 per cent. Punjab National Bank is also in the same league as it registered a 6.1 per cent growth.

 

Key drivers

On what drove the surge in home loans, a senior SBI official said: “Bank employees braved the pandemic and processing of loan applications and disbursal were not adversely impacted. In the absence of corporate loan growth, there has also been greater focus on retail loans, of which home loans constitute a major chunk.’’

Sanjiv Chadha, Managing Director & CEO, Bank of Baroda, said: “Home loans are growing pretty much as per market.’’ During the pandemic times, home loans, along with gold and car loans, are seen as ‘very safe’ for business, say bankers.

The growth in home loans will be sustained in the current year too, say analysts. Banks are also stepping up efforts to sustain the growth.

SBI has sharpened its focus on housing loans. As part of its ‘Monsoon Dhamaka’ offer, it announced a 100 per cent waiver on processing fees till August 31. Before the offer, the processing fee was 0.40 per cent.

Other banks are also gearing up to woo customers with special offers for the coming festival season.

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Collection efficiency of bank loans improves in June, BFSI News, ET BFSI

Banking & Finance

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Chennai: Banks witnessed an improvement in loan collection efficiency in June after states relaxed multiple lockdowns as the second Covid wave recedes.

For Equitas Small Finance Bank, collection efficiency for vehicle loans has come back to 89.3% in June, from 67.35% in May. While for microfinance loans, it is back at 66.9% from 63.6% and for small business loans it is back at 85.1% from 76.8%.

Its MD P N Vasudevan, “The Bank’s borrowers are largely in the informal segments dealing in daily use products and services which were temporarily disrupted due to the Covid-19 restrictions imposed. However, during June, states in the West and North experienced improved collection efficiencies as lockdowns eased while Southern states opened up towards the end of the month. We anticipate a sharp improvement in collections in the coming months as Covid wave recedes.”

For Indian Overseas Bank, the loan collection efficiency rate for small loans, vehicle and housing loans has improved to 85% between June and July from 70%-75% in May. The state-owned bank expects the recovery to be better in the September quarter, as it expects a large recovery of loans.

City Union Bank’s managing director N Kamakoti said that on an overall level, collection efficiency has recovered significantly in June as businesses have understood and adapted to lockdowns better.

A research note from Kotak on banks’ asset quality Kotak said that the recovery environment showed improvement in 1QFY22 though it is still not fully normal. There is likely to be more discussion on the recovery environment for 2QFY22 given the impact of the second Covid wave. Besides small loans, the report said it expects banks to provide a positive outlook on corporate recovery especially given a few large resolutions that have been completed/will be completed soon.



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Market share of banks in individual housing loans up: NHB report

Banking & Finance

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The market share of banks in individual housing loans has gone up from 62 per cent in 2017-18 to 67 per cent in 2019-20, while that of housing finance companies (HFCs) has come down from 38 per cent to 33 per cent.

According to the National Housing Bank’s latest Trend and Progress of Housing in India report, the pace of growth of banks remained higher than that of HFCs, partly supported by portfolio buyouts, leading to increase in their market share in individual loans.

In 2018-19, the market share of banks and HFCs in individual housing loans (IHLs) was at 64 per cent and 36 per cent, respectively. The overall growth in IHLs of banks and HFCs combined stood at 10 per cent in 2019-20 compared to 16 per cent in 2018-19.

The report said: “The real estate and Housing Finance Sector in India began to witness a moderation in growth after the IL&FS crisis in September 2018. However, with proactive measures and various other initiatives of the Government, RBI and NHB, the sector started to gain momentum.”

The total outstanding IHLs of HFCs and banks combined was around ₹20-lakh crore as at the end of March 2019-20 compared to around ₹18-lakh crore in 2018-19.

Outstanding IHLs of Banks and HFCs registered year-on-year growth of 8.5 per cent and 3 per cent, respectively, NHB said.

Slab-wise analysis

Slab-wise analysis of total IHLs of scheduled commercial banks (SCBs) and HFCs combined shows that around 44 per cent of the total IHL as on March 31, 2020 (against 47 per cent as on March 31, 2019) was towards 124 lakh housing units (119 lakh as on March 31, 2019) within IHL slab of ₹25 lakh.

Fifty six per cent of the total IHL (53 per cent as on March 31, 2019) was towards 30 lakh housing units in the IHL slab of over ₹25 lakh, the report said.

Referring to growth in the number of housing units financed within IHL slab of ₹25 lakh, NBH observed that affordable housing continues to grow on account of robust demand and various support measures towards this segment.

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