Neutral on LIC Housing Finance Ltd - Motilal Oswal

LIC Housing Finance (LICHF IN; Mkt Cap USD1.8b, CMP Rs170, Neutral)

LIC Housing Finance (LICHFL) reported 39% YoY net profit growth in 3QFY11 to Rs2.1b - 5% the quarterly results included one-offs by way of income of Rs1.4b booked on sale of stake in LIC MF, and provisions of Rs2.3b on dual rate housing loans and resultant lower effective tax rate.

Reported NIMs during the quarter improved 21bp QoQ to 3.14% while spreads were down 5bp to 2.08%. On the incremental business, spreads were lower at 1.65% (2.12% in 2QFY11).

LICHFL has created provisions of Rs2.3b (post utilization of Rs1b of excess standard provisions) on dual rate housing loans during the quarter. Total portfolio under dual rate scheme is Rs160b (~35% of loans).

Source : Equity Bulls

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