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<dhhead>Message to Shareholders from Chairman</dhhead>
Dear Shareholders,
The year gone by has been a harbinger of hope, with robust performance
in the face of unprecedented developments of the past three-and-a-half decades within the
Company. It is my pleasure to inform you about the yearRss developments and considerable
progress in a spirit of confidence and hope. We continued to underline our role in
enabling millions of aspiring Indians to realise their home ownership dreams.
We consider FY 2023-24 to be an interesting period of change and
consolidation, as we accomplished a major overhaul of the organisational structure, a
massive technology upgrade and a leadership change.
You will read about the first two strategic developments in the
succeeding message, I am happy to share that in August 2023, Mr. Tribhuwan Adhikari was
appointed as the Managing Director & Chief Executive Officer of LIC Housing Finance
Limited. During his career spanning three decades, he has worked in different streams and
gained knowledge and clarity.
During the year, we consolidated our position as IndiaRss largest
Housing Finance Company with an Outstanding Loan Portfolio of Rs 2,86,844 crore and
multiplied our footprint in the past decade. We expanded geographies, built a huge base of
customers, expanded our outstanding loan book, strengthened distribution, and focussed on
growth and digital transformation, generating more stakeholder value and contributing to
IndiaRss economic growth. As a matter of fact, we term FY 2024-25 as the "year of
delivery” as we will then move to our new lending platform.
THE OPPORTUNITY MATRIX
The national real estate landscape has been on a stronger growth path
and continued to experience a surge in end-user demand following a slowdown spanning
several years. In FY 2023-24, not only was India the fastest growing economy globally, but
also witnessed all real estate indicators at record levels. The tailwinds in IndiaRss real
estate sector originate from IndiaRss economic resilience, despite escalating geopolitical
situation and rising inflation.
Post-COVID pandemic, the need to have a good house has been pronounced
with increased consumer confidence.
With substantial pent-up demand from end-users, year-on- year sales
across IndiaRss top seven cities increased 31% in CY2023, as per data from Anarock Group.
Key pillars supporting growth across real estate segments include: the highest GDP growth
forecast among major economies, and a proactive and supportive business environment.
The Finance MinisterRss announcement for 20 million houses under the
Prime Minister Awas Yojana is also giving an impetus to growth. With its "Housing for
All” initiative, India proposes to build 29.5 million houses under the Prime Minister
Awas Yojana (PMAY) by 2024.
Demand increased owing to urbanisation, importance of home ownership,
growing population and rising incomes, demonstrating IndiaRss prominence as one of
IndiaRss fastest growing sectors. The Residential sector witnessed robust demand revival,
as it fast gained momentum and withstood market volatility.
HOUSING FINANCE - ON AN UPSWING
IndiaRss housing finance market is on a growth trajectory with the
Government taking adequate measures to support housing finance, improving demand and
reviving the sector. Growth in housing credit can be attributed to a strong revival in the
residential property market due to the pent-up demand post-COVID pandemic.
Driven by IndiaRss changing demographic profile, rising incomes,
enhanced affordability, and substantial government support. An improving macro-economic
environment, rapid pace of urbanisation, nuclearisation of families, and affordable
mortgages are aiding the industry.
Other key drivers are the emergence of Tier 2&3 cities, easier
access to financing, tax incentives, and the expanded reach of housing finance companies.
With millennials and young borrowers in need of urban accommodation are a potential
consumer base for housing loans, accounting for nearly 27% of borrowers today.
A GROWING POTENTIAL IN AFFORDABLE HOUSING FINANCE
IndiaRss mortgage-to-GDP ratio stands at a mere 11%, significantly
lower compared to the United States (67%) and the United Kingdom (90%). With a large
portion of IndiaRss population residing in small towns, there is a substantial opportunity
for housing finance companies, particularly those targeting low and middle-income
segments.
Affordable Housing is projected to bring in the next wave of growth in
IndiaRss housing finance sector. More and more companies are now tapping into this space
and addressing the huge credit crunch, focussed on catering to the lower income group.
This segment is emerging as a significant opportunity and shows a lot of promise due to
under-penetration and driven by a substantial demand for low-cost housing among IndiaRss
rural and middle-class population.
AUGMENTING THE CORE
At the core of LIC Housing Finance is the mission to increase our share
of Affordable Housing Finance. Our key objective is to broaden the net of financial and
economic inclusion by providing a sense of security and ultimately creating customer
delight. With this, our aim is to empower people who have always dreamt of owning a house,
without adequate means to achieve it. We are targeting at helping this segment of the
society build homes.
As the leader in IndiaRss Housing Finance industry, we also understand
our social responsibility and made total sanctions of Rs 48,000 crore by consistently
contributing to
Phase 1&2 of PMAY and to the governmentRss CLSS scheme. Aligned
with the governmentRss initiative of "Housing for All”, our core strategy
entails facilitation of financial inclusion through a wider spread. We are committed to
serving home buyers from the low-income groups of the economy and seek to offer better
access to customer-centric solutions and simultaneously provide the benefit of PMAY to the
eligible segment.
WAY FORWARD
As the transformative journey of LIC Housing Finance continues, with
our ability to source low-cost liability from strong fundamentals, we improved our
liability management and ensured that despite rising rates, we are working on cost
optimisation and enjoy being one of the lowest on cost of funds, despite the monetary
tightening measures of the Reserve Bank of India. We are also better placed on liabilities
vis-a-vis other players.
Going forward, our key focus area continues to be - higher yield
productivity with proper due diligence to mitigate risks, increase per branch business;
and enhance per employee productivity.
The rapid pace of finance, affordable mortgages, increased urbanisation
and changing lifestyles continue to spur growth of IndiaRss Housing Finance Market, which
is projected to grow by 20% CAGR between 2022-2027. Demand is visible across sectors and
loan segments, with small towns and affordable loans having taken a huge lead.
IN CONCLUSION
At LIC Housing Finance, we continue living our dream of building a roof
for every Indian by supporting Affordable Housing and serving new home buyers and
complementing Housing for All.
Our proactive approach is on capitalising growth opportunities within
the housing finance sector, aimed at presenting us as a forward-thinking, resilient, and
innovative company ready for future opportunities, while accelerating current growth
momentum.
I thank all our stakeholders for their trust, support, guidance and
good wishes. The journey ahead is long and interesting and together we will continue to
grow with resilience.
I am positive the best is yet to come.
Sincerely,
Siddhartha Mohanty
Chairman & Non-Executive Director