Page 15 - BF Cover February 2019

HOUSING

HOUSING

NEWS
NEWS
NEWS
NEWS
NEWS

Indiabulls Housing Fi- Affordable housing is affecting the profit margin of real
nance expects 17-19% estate companies

profit growth in FY20 India's real estate market has ultimately recovered after seven long years in
2018. Along with higher sales, the inventory of unsold houses touched a new
Indiabulls Housing Finance on Janu- low. These positives were largely driven by the
ary 31 reported government's incentives for affordable housing.
a net profit of
Rs 985.51 crore According to global property consultant Knight
for the October- Frank, which analysed trends across top eight cit-
December quar- ies, "60% of the new launches in 2018 were within
ter, a drop of 13.72 percent YoY. the Rs.50 lakh bracket, or the affordable and mid-
Gagan Banga, Vice Chairman and range segment". Another trend in the last two-three years was increased offtake
Managing Director of Indiabulls in tier II and tier III cities. Property prices were, however, range-bound across
Housing Finance, said the company most cities. Some regions such as Mumbai even showed a drop.
expects loan growth of 20-25 per- A study of 25 listed real estate companies by CARE Ratings Ltd shows that the
cent ahead. Asset quality will remain
revenue grew by 11.3% in the first half of FY19 over the year-ago period. Sales
stable, given steady builder repay-
ments, Banga said. "Almost over 70 bounced back from the previous year's low base, when sales were impacted
percent of the portfolio is supported because of regulatory hurdles and increased compliance under the Real Estate
by rent discounting transactions," (Regulation and Development ) Act.
Banga added.
Merger will not lead to reduction in branches: Dena Bank
He also said the company's total
builder portfolio is around Rs 20,000 The proposed merger with Bank of Baroda and Vijaya Bank will not result in
crore. "The company has seen over reduction of bank branches, said Karnam Sekar, Managing Director and CEO,
40 quarters of profitability despite all Dena Bank.
odds," Banga added. "Branch reduction may not be there because we have done detailed exercise
Indiabulls Housing Finance expects to geography wise and we have already completed 4-5 geographies; maybe one
deliver profit growth of 15-16 per- or two excess branches we may relocate but closure or reduction number of
cent in FY19 and 17-19 percent in branches will not be there," he told.
FY20, the company said in a state- Talking about merger, he said, "Once the amalgamation was announced all
ment. Banga added that the com- the three banks (Dena Bank, Vijaya Bank and Bank of Baroda), of course Vijaya
pany has taken some small develop-
ers to the National Company Law Bank does not have much exposure to corporate, but all 3 of us sat together
Tribunal (NCLT). and we have done harmonisation of provisions."

BANKING FINANCE | FEBRUARY | 2019 | 15