ICICI Bank May Sell Stake in Housing Finance Arm

Published: 11th July 2015 05:12 AM  |   Last Updated: 11th July 2015 05:12 AM   |  A+A-

NEW DELHI: ICICI Bank Limited is likely to sell its home finance arm valued at around Rs 4,400 crore. However, ICICI Bank on Friday said that it has received lot of enquires from interested parties and the company will take a call soon.

ICICI Home Finance Company is a wholly-owned subsidiary of ICICI Bank.

The company further added that ICICI Bank’s mortgage business is primarily done within the bank and this business has been growing rapidly. Only a very small portion of the bank’s overall mortgage business is done by ICICI Home Finance Company, it said.

ICICI Home Finance contributes about 10 per cent of the book value of total home loans given by ICICI. “ICICI Home Finance focuses on home loans in smaller cities and has smaller ticket size.”

Several other banks are also in the fray to sell stake from their non-core business. Central Bank of India has also announced plan to sell its housing finance business. Punjab National Bank has already sold part stake in its housing finance arm.

However, industry analyst says that with about 8 per cent mortgage to GDP penetration and rising income levels, they expect 18 per cent CAGR mortgage growth over the next five years. “While competition has remained intense, large HFCs have gained share due to their competitive cost of funds and lower opex structure against the banks and smaller HFCs have built niches in funding low-cost housing,” says Amit Sharma, analyst at Comtrade Advisors. 

ICICI HFC had earned a net profit of Rs 197.57 crore for fiscal ended March 2015. The company paid interim dividend of 2.75 per cent in June last year, 2.75 per cent in September, 3.25 per cent in December, and 3.55 per cent in March 2015.

As per the latest annual report of ICICI Housing Finance Company, the mortgage market continues to grow, especially in Tier III & IV cities, driven by primary consumption. This has led to increased focus by most organised lenders into these markets.

“Our company continues to focus on these emerging markets, which provide a reasonable growth opportunity. We will continue to invest and build distribution and organisational capabilities and offer mortgage related products and services in this markets,” it said.

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