Credit costs under control, asset quality improving
LIC Housing Finance is on track to maintain its credit cost guidance of 15 basis points for FY26, according to Tribhuwan Adhikari, MD & CEO.
Speaking to ET Now, Adhikari said, “Our credit costs for the first half were within expectations — 5 bps in Q2 and 6 bps in Q1. We’re confident of staying within the guided range for the full year.”
He noted that the company’s gross NPA ratio improved by 8–10 bps in the latest quarter. “Most of the defaults are legacy cases from 2016–2019 in construction finance, and we expect one or two major resolutions in Q3 and Q4,” he added.
Growth outlook: Retail segment leads as project loans recover
Despite a muted second quarter, Adhikari reaffirmed LIC HFL’s double-digit growth target for FY26.
“Rate cuts have already been passed on to both new and existing customers. The retail segment continues to perform well, while project finance has seen some weakness,” he explained.He expects a strong rebound in the coming quarters, traditionally the company’s best-performing period. “Q3 and Q4 will be critical. We’re confident of achieving the full-year growth guidance,” he said.
Margins stable after rate reset; bottom reached at 2.62%
Adhikari highlighted that Net Interest Margins (NIMs) stood at 2.62%, the lower end of LIC HFL’s guided range of 2.6–2.8%.
“NIM compression was expected due to the 25 bps rate cut across our loan book earlier this year,” he said, explaining that one-third of the portfolio was repriced in April and the remaining two-thirds in July.
“The repricing is now fully complete. We’ve taken the entire hit in Q2 and expect stability in margins going forward,” Adhikari said confidently.
Optimism for second-half recovery
The LIC HFL chief remains optimistic about the coming months. “With asset quality improving, credit costs contained, and growth momentum returning in retail housing, the outlook for the second half looks strong,” he said.
He also added that the company is “very close” to resolving large construction finance accounts, which could further lower credit costs and boost profitability.