Housing finance companies clock 15% YoY portfolio growth in Q1, but rate hikes could moderate growth for FY23, says ICRA

• The on-book portfolio stood at ₹12.7 lakh crore at the end of June 2022, up from ₹11 lakh crore in the previous year.
• The high growth in Q1 was due to moderate growth in the same period last year, ICRA said.
• The ratings agency pegs the full-year portfolio growth between 10-12%.
• ICRA also said that asset quality also witnessed an improvement during Q1 FY23.

Housing finance companies have clocked a 15% year-on-year growth in their on-book portfolio in Q1 FY23, according to credit rating agency ICRA. However, the high growth in Q1 was due to moderate growth in the same period last year, the ratings agency said.

Overall, housing finance companies’ on-book portfolio stood at ₹12.7 lakh crore at the end of June 2022, up from ₹11 lakh crore a year ago.

“The growth was driven by the healthy demand in the industry and the increasing level of economic activity. Going forward, demand is expected to remain firm,” said Sachin Sachdeva, VP and sector head – financial sector ratings, ICRA, while retaining growth and asset quality estimates for FY23.

However, the boost from the low base effect in Q1, combined with the rising interest rates, could result in a slightly lower pace of growth in FY23 than Q1 – the ratings agency pegs the full-year growth between 10-12%.

According to a Livemint
report, the weighted average increase in interest rates on fresh rupee loans from banks between April and August 2022 stood at 82 bps.

The RBI has
increased the repo rate by 190…