LIC Housing Finance Q2 profit jumps 11.7% to ₹1,507 crore, but margins slip

LIC Housing Finance earned ₹1,507 crore in the July-September quarter, up 11.7% from a year earlier. The lender wrote more home loans and financed more housing projects, but its core earnings barely moved, and investors noticed.

Start with the lending. The company disbursed ₹18,127 crore in the quarter, up 11% from ₹16,313 crore. Retail home loans, the heart of the business, rose 10% to ₹17,563 crore. Project loans, which go to builders and developers, jumped 49% to ₹564 crore, though from a much smaller base.

Now the catch. Net interest income (NII), the gap between what a lender earns on loans and pays on its borrowings, rose just 2.5% to ₹2,099 crore. Profit grew far faster than that core measure. Total income edged up to ₹7,183 crore from ₹7,080 crore.

The half-year numbers tell the same story. Net profit for April-September rose 10% to ₹2,997 crore, and disbursements climbed 13% to ₹33,140 crore. Project loan disbursements surged 169% to ₹1,436 crore. But the net interest margin, a measure of how much the lender keeps on each rupee it lends, slipped to 2.57% from 2.65%. The company links this to pressure on spreads in a competitive lending market.

The overall loan book stands at ₹3.26 lakh crore, up 5% as of September 30. Retail loans make up ₹3.16 lakh crore of that, up 4%, while the project loan book grew 12% to ₹9,740 crore. Disbursements are growing faster than the book itself, which suggests a good part of the new lending is replacing loans that are being repaid.

Managing Director and CEO Sandeep Kumar called the housing finance sector resilient, pointing to steady retail demand. He said the company is focused on sustainable growth, customer service and efficiency. He also voiced confidence that favourable demographics, economic growth and government attention to housing will keep borrower sentiment supportive.

The stock did not cheer. Shares settled nearly 4% lower at ₹493.70 on the NSE and are down about 8% so far this year. The filing does not explain the drop, but the pairing of strong profit with sluggish NII and a narrower margin shows what the market is weighing: more loans are not automatically more earnings.

Source: CNBC-TV18's report on LIC Housing Finance's Q2 results.

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