GIC Housing Finance's Bad Loans Spike to 11.4%
A sharp rise in bad loans to 11.4 per cent in June 2021 from 7.4 per cent in March 2021 has weakened GIC Housing Finance’s (GIC HF’s) solvency and profitability. With the second wave of Covid-19 coming in April 2021, the country again witnessed a series of lockdowns, which impacted the cash flows of borrowers. Also the company, which lends predominantly to the salaried class, was unable to collect from borrowers. This led to a sudden rise in slippages and weakening of solvency and profitability metrics. The deterioration in the asset quality would further impact GICHF’s earnings profile, and consequently, its internal capital generation. The company has enough headroom to raise tier II capital as all of the capital is currently in the form of tier I capital. Gross NPAs rose to 11.4 per cent in June 2021 from 5.64 per cent in June 2020. Net NPAs shot up from 3.05 per cent in June 2020 to 7.86 per cent in June 2021. Housing loan book has shrunk in 12 months to Rs 12,045 crore in June 2021 from Rs 12,781 crore a year ago, according to a filing with the BSE.