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MUMBAI: Affordable housing-focused Magma Housing Finance is planning to sell at least 25 percent more home loans in the second half of this fiscal. They have decided to do so because the business has almost been returned to the pre-lockdown stage now.

 Magma Fincorp is the fourth largest affordable housing-only player. Besides that, it is a fully-owned subsidiary of a non-banking player. They have experienced a 23 percent growth in the September quarter.

 Manish Jaiswal the managing director and chief executive has told that they expect the second half loan sales to be clocking around 25 percent growth and closing the current fiscal with a loan book of Rs 4,200 crore from Rs 3,554 crore as of Q2.

“What we are focusing on is a 20-25 percent loan growth on a sustained basis for the next three-four years,” he told.

 His optimism is because of 23 percent loan growth during the September quarter in terms of sanctions when incremental disbursement rose by Rs 267 crore. This quarter has witnessed an outstanding loan booking to Rs 3,554 crore, irrespective of the massive disruptions due to the pandemic.

 This thing led to an improvement in asset quality and lower cost of funds, helped it log a 30 percent spike in net income at Rs 18.7 crore. This number excludes pandemic provisions of Rs 6.5 crore.

 In Q2 the asset quality has been improved by 60 basis points (bps) to 1.6 percent. It is within the levels in the low-cost housing finance industry where the bad loans are under 2 percent.

 Jaiswal has attributed the increase in net income to organic growth because there was higher demand from small towns and the fact that loan sales have come back to 87 percent of the pre-lockdown months. Collections are at 92 percent of the before lockdown level.

 He also said on the asset quality improvement that three years ago the company had a heavy loan against property collateral, which led to high bad loans of over 5.8 percent. Now it is just about 1.6 percent he added.

Magma Housing is present across 19 states with 103 branches serving 30,000 customers as of September 2020.

 The company has raised Rs 817 crore this year from a wide base of lenders; it is helping them to lower the cost of funds by 54 bps.

 One more reason for the higher profit was lower operating expenses, which has reached to 2.7 percent from 3.5 percent of AUM as a result of operational efficiency and use of technology under which it has ensured that all dealings with the customers are done only through mobile phones.