REPCO home finance – another Gruh in the making?

R. Varadarajan – Managing Director addressed the call:Highlights by Capital Mkt
Loan book of the bank jumped 31% to Rs 6848.8 crore at end September 2015, driven by strong 42% surge in disbursements to Rs 1356.4 crore and sanctions by 46% to Rs 1519.6 crore in Q2FY2016 over Q2FY2015.
As per the company, the loan growth was driven by all geographies. The company has expanded operations to Maharashtra and Gujarat five years back. These states contribute 7.5% of loan book, while its share in loan book is expected to further rise to 10% in few years.
The company continues to hope to maintain loans growth in strong 25-30% range.
The company has continued to diversify sources of funding, strengthening case for ratings upgrade.
Loan book mix between home loans and LAP was 80.8:19.2 at end September 2015 compared with 80.5:19.5 at end September 2014.
The customer mix between salaried and non-salaried was 42.4:57.5 at end September 2015 compared with 44.3:55.7 at end September 2014.
Average ticket size for the company increased to Rs 12.8 lakh at end September 2015 from Rs 11.6 lakh a year ago. An incremental loan ticket size was higher at Rs 16.8 lakh in Q2FY2016 with Rs 15.4 lakh for home loans and Rs 23 lakh for home equity.
The company has continued to maintain the LTV ratio at 50%.
As per the seasonal trend, GNPA ratio dipped to 2.22% at end September 2015 from 2.22% at end June 2015. NNPA ratio also declined to 0.92% at end September 2015 from 1.29% at end June 2015.The company do not have any asset quality concerns, while proposes to reduce GNPA to industry level
State wise GNPA position was Tamil Nadu 1.5%, Karnataka 1.9%, Andhra Pradesh 2.1%, Telangana 3.9%, Kerala 4.1%, Maharashtra <1% and Gujarat 1.5% at end September 2015.
Provision coverage ratio (PCR) of the company improved to 49.5% at end September 2015 from 42.4% a quarter ago. The company intends to improve PCR to 100% in next 2-3 years.
Spread stood at 2.95% and a NIM at 4.45% in Q2FY2015. Company expects to sustain target of 3% spread and NIM above 4%.
Capital adequacy ratio/CAR continues to be comfortable at 19.4% at end September 2015. The company expects CAR ratio to benefits from regulatory reduction in risk weights for housing loans in Q3FY2016.The cost-to-income ratio stood at 21.3% for Q2FY2016, including ESOP expenses and 18.5% excluding ESOP. Company expects to maintain the cost-to-income ratio at around 21% till end March 2017.The leverage ratio of the company stood at 6.6X, which company can raise to 9% with any rating impact.