Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Solid Numbers For Now: LIC Housing Financing (LICHF.IN) [LIC] reported FY 1Q21 earnings results of INR 8.2 bn, improving INR 4.0 bn (94.0%) linked quarter. Driving the results, we note positive operating jaws. Also aiding LIC’s results, we note an INR 85 mn (14.9%) decline in loss provisioning tracking the improvement in overall credit quality; and substantial tax rate decline from 54.8% to 19.7% linked quarter; and*Credit Risk Flat, But Reserves Light: Stage 3 loans at LIC declined INR 216 mn (0.4%) linked quarter to INR 59.4 bn, and remained flat relative to total loans at 2.83%.There is no doubt under our calculation that LIC’s provisions remain woefully inadequate. We believe reserves need to be buttressed in the neighborhood of INR 33 bn or an entire year on bottom-line performance.

*Solid Numbers For Now: LIC Housing Financing (LICHF.IN) [LIC] reported FY 1Q21 earnings results of INR 8.2 bn, improving INR 4.0 bn (94.0%) linked quarter. Driving the results, we note positive operating jaws. Also aiding LIC’s results, we note an INR 85 mn (14.9%) decline in loss provisioning tracking the improvement in overall credit quality; and substantial tax rate decline from 54.8% to 19.7% linked quarter; and*Credit Risk Flat, But Reserves Light: Stage 3 loans at LIC declined INR 216 mn (0.4%) linked quarter to INR 59.4 bn, and remained flat relative to total loans at 2.83%.There is no doubt under our calculation that LIC’s provisions remain woefully inadequate. We believe reserves need to be buttressed in the neighborhood of INR 33 bn or an entire year on bottom-line performance. 

LIC Housing Finance - Positive Operating Deltas