HFCs Fear to Loose Market Share to Banks

April 26, 2007	(1 votes, average: 4 out of 5)  Loading ...
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The profits of housing finance companies (HFCs) are likely to be majorly affected by the race among banks and rising home loan interest rates. Incremental net profitability margins of HFCs are believed to have fallen to 1.52% in the first half of 2006-07, from 1.76% in 2004-05.

HFCs may loose against banks in gaining market share race. From 23% of the incremental market, the share of these companies is likely to fall to 20% at the end of the financial year. However, banks seem to be on safer side this time because of their resource profile. They can easily attract deposits and also have current and saving accounts. Contrary to this, HFCs are largely dependent on wholesale borrowings.

Small companies are in a look out for making a base tier II and tier III cities, where banking does not have a strong presence. They may also try to raise loan pools, securitise and sell them to generate large fund for future disbursals.

The ratings on HFCs do not show any significant changes. But the large companies like LIC Housing and HDFC are still in a better situation, concerning 70% market share among housing companies.

News Published Under:   Banking and Finance |

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