Aggressive loan growth will continue: SHFL

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Home lender plans to add branches and increase staff, says Sundaram Home Finance Ltd. MD

Home lender plans to add branches and increase staff, says Sundaram Home Finance Ltd. MD

Sundaram Home Finance Ltd. (SHFL) expects the aggressive growth in loan disbursements to continue in the current financial year, Chief Executive Lakshminarayanan Duraiswamy said.

“The segments and geographies we are targeting have continued their positive trend this year,” Duraiswamy said. “Demand has been consistent over the past 3-4 quarters. This is an indication that the growth story in the real estate space remains intact. Disbursements for the quarter ended March 31 increased 73% for reach ₹794 crore from a year earlier.The company shelled out more than ₹300 crore in March alone, the highest in its history.

“We continue to focus on Tier 2 and Tier 3 cities and expect these locations to drive our growth this year,” he added. “Our ability to understand the client and underwrite independent professionals gives us an advantage in these markets.”

SHFL also plans to add branches this year, to the current 105. in Andhra, Telangana, Karnataka and Tamil Nadu,” he said. Mr Duraiswamy had said in May that “the contribution of Tier 2 and 3 cities in the southern market” to total activity had risen to around 70% at the end of March, from around 55% a year earlier.

Expansion would likely initially be on a “hub and spoke model”, with new branches starting small and working closely with the nearest branch. “But we expect each of these new sites to become full-fledged branches within 18 months of starting operations. While the 10 branches outside the South are doing well, we will continue to expand in the Southern region this year and consolidate our presence in these markets before considering further expansion outside the South,” said Mr. Duraiswamy .

At the same time, the company also plans to increase its workforce by around 300. “We are stepping up hiring this year and are looking to hire 250 to 300 people from a base of 800. We hired around 170 people last year. We believe that hiring quality people will be an important factor in accelerating growth. Interestingly, the company has run training programs for managers to improve their interviewing skills to help identify the best-fit candidates.

Asked if a looming global recession or even a slowdown in India due to rising lending rates could end up dampening the real estate sector, Mr Duraiswamy said: “We continue to be bullish on the outlook. long-term. We do not expect consumer demand to decline in this space in the near future. We believe the real estate industry is fundamentally sound and poised to grow. Tier 2 cities are clearly catching up with growth and giving us plenty of opportunities.

He also pointed out that affordability has increased in smaller towns and buyers are now willing to invest in homes in those locations. “Investment in plots is also increasing in Tier 2 and Tier 3 locations. With the opening of new branches, we will also focus on affordable housing,” he said.

Mr Duraiswamy said the company had seen a spike in deposit inflow after two deposit rate hikes twice in the recent past. “We believe fixed deposits will continue to be a consistent source of funding for us. We expect seniors and trusts to embrace our attractive rates on 4- and 5-year deposits,” he said.

The company plans to raise ₹4,000-4,500 crore this year, he added.

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