Indian Housing Finance

Mar, 2013   |   Care Research   |   Format : PDF

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The total o/s housing loans in India is ~8.3% of its GDP (at current prices) in FY12, indicating a huge potential market due to its lower mortgage to GDP ratio compared to its Asian peers like China (20%), Singapore (54%), Korea (36%) and developed economies of USA (77%), UK (85%). CARE Research estimates that total housing loan (HFC + Banks) to grow @ CAGR of 19% during FY13-FY15e, leading to total housing loan market of Rs. 11,579 bn in FY15e (from Rs. 6,896bn in FY12). CARE Research expects HFC loan book to grow at a higher rate compared to housing loan provided by banks.

CARE Research estimates NIM to remain subdued in FY13e on 1) competitive loan pricing, 2) lower credit off take to builder loans (interest rate being ~400bps higher) & 3) higher cost of fund on account of funds sourced at higher interest rates (which may lead to cyclical compression in HFC spreads due to the wholesale-funded nature of their liabilities). However, CARE Research estimates NIM to expand by 20-40 bps in FY14e.

The HFCs have been able to bring down the non-performing assets (NPA) from ~4% in FY04 to ~0.75% in FY12. It is pertinent to note that HFCs have maintained comfortable level of NPA during global economic slowdown indicating their robus

SECTION-I CARE Researchs OUTLOOK
Outlook and Challenges
Outlook on the Indian Housing Finance Sector
Outlook on the total housing loan (HFCs + Banks) growth
Outlook on the Net Interest Margins (NIMs)
Outlook on the asset quality (NPA)
Outlook on the Capital Adequacy Ratios (CAR)
Outlook on Return ratios: ROA/ROE
Key Challenges of Indian Housing Finance sector
Key emerging trends in Indian Housing Finance sector

SECTION-II INDUSTRY SECTION
Overview of Indian Housing Finance Industry
Industry growth and structural drivers
HFCs loans outpacing the bank housing loan growth
Drivers of housing loan demand

Introduction to Indian Housing Finance Industry
Evolution of housing finance in India
Component of housing finance
Funding sources in the sector
Housing microfinance in India
Major consolidation in housing finance sector
Kay challenges faced by Indian housing finance sector

Regulations
Regulatory Framework
Pre-prudential regulation
Sources of funds and permissible limits
Interest rate ceilings on public deposits
Prudential regulation
SaRFAESI Act, 2002
Duration of recognition of non-performing assets (NPA)
Income Tax act, 1961 and Direct Tax Code, 2010
Risk weights on loans based on LTV
Pre-payment levy/pre-closure penalty waived off by NHB
SEBIs mandate for investment in HFCs
External commercial borrowing (ECB) guidelines by RBI

Borrowings and Cost of fund
Sources of borrowing
Borrowing pattern
Borrowing Mix: Trend analysis
Cost of fund: trend analysis and guidance

Securitization and covered bonds
Global securitization market: trend analysis
Indian market: trend analysis and guidance
Impact of RBI final guidelines on securitization
Covered bond proposal by National Housing Bank (NHB)
Key features of covered bond
Key element of rating framework
Important covenants of covered bond
Global covered bond market

Loan portfolio and Net interest margins (NIM)
Loan portfolio of HFCs
Loan portfolio mix: trend analysis
Investments
Net interest margins (NIM): trend analysis and guidance

Asset quality - NPA
Non-performing assets (NPAs): trend analysis and guidance
Provision cover ratio (PCR): trend analysis

Capital adequacy and return ratios
Capital adequacy regulatory norms
Capital adequacy levels of HFCs: trend
Return ratios performance: ROE/ ROA

SECTION-III COMPANY SECTION
Housing Development Finance Corporation Limited (HDFC)
Company overview
Business profile and growth strategies
Products offered
Operational highlights
Performance highlights
Income statement statistics
Key financial ratios
Balance sheet statistics
Credit ratings

Dewan Housing Finance Corporation Limited (DHFL)
Company overview
Business profile and growth strategies
Products offered
Operational highlights
Performance highlights
Income statement statistics
Key financial ratios
Balance sheet statistics
Credit ratings

LIC Housing Finance Limited (LIC HF)
Company overview
Business profile and growth strategies
Products offered
Operational highlights
Performance highlights
Income statement statistics
Key financial ratios
Balance sheet statistics
Credit ratings

SECTION-IV ANNEXURES
Size - wise incremental loan disbursal (FY04-12)
Termwise total housing loan disbursal of HFCs (FY08-12)
Borrowing Profile of HFCs (FY04-12)
Loan Profile of HFCs (FY04-12)
Size-wise deposits of HFCs (FY03-12)
Interest rate wise deposits of HFCs (FY03-12)
Maturity-wise deposits of HFCs (FY03-12)
Securitization transactions (FY02-12)
Statistics on Outstanding global covered bond market(2003-2011)
Statistics on incremental global covered bond market(2003-2011)

List of Graphs and Tables

SECTION-I CARE Researchs OUTLOOK

Outlook and Challenges
Indian housing finance (HFCs + banks) industry loan growth (FY08-15E)
HFCs industry loan growth (FY08-15E)
Annual Net Interest Margin (NIM) of top 3 HFCs (FY08-12)
Quarterly movement Net Interest Margin (NIM) of top 3 HFCs (1QFY10-3QFY13)
NPA level of HFCs (FY04-FY12)
Quarterly movement of non-performing assets (NPA) of HFCs (1QFY10-3QFY13)
Capital adequacy levels of HFCs (FY04-12)
Graphical representation of mortgage guarantee product by IMGC

SECTION-III NDUSTRY SECTION
Overview of Indian Housing Finance Industry
Total outstanding housing loan (FY05-13e)
Housing affordability index (FY02-12)
Per capita income levels (CY00-CY17e)
% of population in earning bracket (FY11)
Comparison between housing loan growth rate of HFCs and banks (FY03-FY13e)
Share of HFCs and banks in total housing loan industry (FY03-FY13e)
Table on breakup of total housing loan among HFCs and Banks (FY04-13e)
Housing loan as a %age of GDP at current prices (FY06-12)
Mortgage to GDP ratio global comparison (FY10)
Housing Price Index Property prices in Metros and Tier I cities (1QFY08-3QFY13)
Housing Price Index graphical representation (1QFY08-3QFY13)

Introduction to Indian Housing Finance Industry
Evolution of housing finance industry Five-year plan-wise
Graphical representation of evolution of housing finance industry
Timeline Housing Finance (1970-2012)
Housing finance growth over the years (FY05-13e)
Graphical representation of housing Finance reverse mortgage loan
Graphical representation of types of institutions for funding
Sources of HFCs and banks to raise funds
Consolidation in housing finance industry

Regulations
Table of maximum borrowings permissible
Table of maximum interest rate payable on public deposits
Interest rate on public deposits ceiling
Guidelines by NHB for accepting public deposits
Table on provisioning norms for HFCs
Table on focus areas of SaRFAESI Act
Table on benefits of SaRFAESI Act to HFCs
Table on maximum amount deductible as interest and principal
Loan Bucket & LTV wise risk weights as directed by several guidelines
Capital Adequacy Norm stricter regulation already in-place

Borrowings and Cost of fund
Table on typical sources of borrowing for HFCs
Borrowing trend analysis (FY04-12)
Deposit growth and borrowing growth of HFCs industry (FY04-12)
Borrowing mix of HFCs (FY04-12)
Amount-wise public deposit mix (FY04-12)
Interest-rate wise break-up of public deposit of HFCs (FY04-12)
Maturity profile wise break-up of public deposits of HFCs (FY04-12)
Borrowing profile of leading industry players (FY12)
Cost of fund of leading industry players (FY08-12)
Benchmark/repo rate movement (FY08-12)
Table on Borrowing cost analysis FY13e

Securitization and covered bonds
Securitization transaction in European Union (EU) (CY01-11)
Collateral-wise securitization transaction in EU (CY01-11)
Securitization transaction in United States (US) (CY01-11)
Collateral-wise securitization transaction in US (CY01-11)
Securitization transaction in India (FY02-12)
Collateral-wise securitization transaction in India(FY02-12)
Table on covered bond mechanism
Number of issuers of covered bond (CY03-11)
Outstanding covered bond market (CY03-11)
Placement-wise outstanding covered bond market (CY03-11)
Coupon-wise outstanding covered bond market (CY03-11)
Sector-wise outstanding covered bond market (CY03-11)
Incremental issuances in covered bond market (CY03-11)
Placement-wise incremental issuances in covered bond market (CY03-11)
Coupon-wise incremental issuances in covered bond market (CY03-11)
Sector-wise incremental issuances in covered bond market (CY03-11)
Country-wise outstanding issuance of covered bond in 2011
Country-wise incremental issuance of covered bond in 2011

Loan portfolio and Net interest margins (NIM)
Housing loan growth: trend analysis (FY04-12)
Housing and non-housing loan portfolio (FY04-12)
Loan Portfolio mix: housing and non-housing loans (FY04-12)
Sizewise loan bracket (FY04-12)
Tenurewise loan bracket (FY04-12)
Investments growth (FY04-12)
Net Interest Margins trend (FY04-12)
Quarterly Net Interest Margins trend (FY04-12)
Repo rate and HDFC loan yield co-relation (FY04-12)
Table on loans/advances return analysis for FY13e

Asset quality - NPA
Non-performing assets trend (FY04-9MFY13)
Quarterly Non-performing assets trend (1QFY10-3QFY13)
Provision coverage ratio trend (FY04-12)
Credit cost ratio trend (FY04-12)
Table on asset quality and provision cover of few HFCs

Capital adequacy and return ratios
Capital to risk - weighted assets regulatory requirement (2001-12)
Capital adequacy levels of leading HFCs
Table on CAR, Tier I&II ratios of few industry players

SECTION-III COMPANY SECTION
Housing Development Finance Corporation Limited (HDFC)
 Share holding pattern as on December 2012
Loan book growth (FY07-12)
Operational highlights (FY03-12)
Income statement statistics (FY07-9MFY13)
Key financial ratios (FY07-9MFY13)
Credit rating as on March 2013

Dewan Housing Finance Corporation Limited (DHFL)
Share holding pattern as on December 2012
Loan book growth (FY07-12)
Chart on business profile
Operational highlights (FY03-9MFY13)
Income statement statistics (FY07-9MFY13)
Key financial ratios (FY07-9MFY13)
Credit rating as on March 2013

LIC Housing Finance Limited (LIC HF)
Share holding pattern as on December 2012
Loan book growth (FY07-12)
Income statement statistics (FY07-9MFY13)
Key financial ratios (FY07-9MFY13)
Credit rating as on March 2013

SECTION-IV ANNEXURES
Size - wise incremental loan disbursal (FY04-12)
Termwise total housing loan disbursal of HFCs (FY08-12)
Borrowing Profile of HFCs (FY04-12)
Loan Profile of HFCs (FY04-12)
Size-wise deposits of HFCs (FY03-12)
Interest rate wise deposits of HFCs (FY03-12)
Maturity-wise deposits of HFCs (FY03-12)
Securitization transactions (FY02-12)
Statistics on Outstanding global covered bond market (2003-2011)
Statistics on incremental global covered bond market (2003-2011)

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