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HDFC (Housing Development Finance Corporation)
New capital norms may trigger derating: The new capital norms prescribed by the
RBI for “financial conglomerates” would impact Tier-1 for HDFC by ~125bps and
also Tier-2 capital. Though Tier-1 even after adjusting for the new norms would be
well within the regulatory limits prescribed, lower Tier-1 capital and further
tightening of norms could trigger a de-rating on concerns of lower structural ROEs.
Irrational competition: Competition has been irrational in the home loan segment
with dual rate schemes, forcing even HDFC to offer dual schemes. Liquidity
situation before 6 months allowed Banks/NBFCs to offer fixed/ floating schemes due
to lower short-term funding costs, but given increase in rates over the last 3 months,
continuing with such schemes would impact margins. Also a shift in focus from
unsecured to secured lending is leading to banks being more aggressive in this
segment.
Home loan demand susceptible to rising prices: Home prices have been on a
steady rise across geographies in India and we believe that would risk home sales and
mortgage loan demand. Though sanctions and disbursements growth is still healthy
for most players, rising real estate prices remain a risk to mortgage demand.
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