INSUBCONTINENT EXCLUSIVE:
Mumbai: Housing finance companies (HFCs) are expected to post modest earnings for the June quarter, as industry-wide loan disbursals rose
about 8% year-on-year, analyst estimates show
However, margins are likely to come under pressure due to heightened competition from banks and the impact of recent rate cuts.Additionally,
provisioning costs may rise amid slower recoveries, potentially resulting in flat growth in profit after tax.According to estimates by
brokerage firm PL Capital, the assets under management (AUM) of HFCs are expected to surpass ?3.7 lakh crore as of the end of the June
quarter, marking a 1% sequential growth
However, loan disbursals may decline by over 26% quarter-on-quarter due to seasonally weak demand."Bank credit to HFCs has been slowing due
to weaker demand, decelerating from 13.0% YoY in July 2024 to 9.0% in May 2025," said Gaurav Jani, analyst at PL Capital
"While banks' housing credit growth was tepid at 0.9% in May 2025, the increased liquidity in the system could lead to a slight pickup in
housing credit, further intensifying competition for HFCs."
AgenciesAnalysts expect large HFCs to report net interest margin (NIM)
compression, primarily driven by declining yields amid increasing competition, particularly from public sector banks.
Live EventsAccording
to Motilal Oswal, LIC Housing Finance could see a sequential margin decline of around 5 basis points, while its loan growth may be around 8%
PNB Housing Finance is expected to report 16-17% YoY growth in its total loan book, with a similar 5 basis points sequential contraction in
NIM."Despite a 100 basis point cut in the repo rate by the RBI, most affordable HFCs did not revise their PLR rates until June 2025, which
should support margin expansion," Motilal Oswal noted
"Asset quality for HFCs remains largely stable, apart from the typical seasonal trends seen in Q1
Credit costs are expected to remain benign."HomeFirst Finance is likely to post 12% YoY loan growth, while Aavas Financiers could face some
Both companies may see seasonal weakness in asset quality, though credit costs are expe5cted to remain under control, analysts say.Five Star
Business Finance, meanwhile, is expected to report subdued loan growth and disbursements, as the company maintains a cautious approach amid
ongoing asset quality and collection challenges.
