SMFG India Credit Co is open to acquisitions in the home finance segment, said the company’s managing director and chief executive officer Shantanu Mitra. Mitra,however, did not divulge any specific details.
“We are open to acquisitions. There is no reason not to. But, the pricing has to be right,” he said at a press meet on Wednesday.
Currently, SMFG India provides affordable housing loans through its subsidiary SMFG India Home Finance Co. Around 65% of the subsidiary’s portfolio is comprised of home loans and the remaining 35% is loan against property.
Formerly known as Fullerton India Credit Co, the non-bank lender aims to double its consolidated loan book in next three years.
It also intends to explore co-lending arrangements with banks and provide loans to Japanese original equipment manufacturers. Here, it has already begun financing construction equipment for Hitachi.
“We have not yet explored all synergies that we can with SMFG. With those synergies coming in, we expect to double our book in next three years or so,” he said.
Mitra believes that the loan book of both the non-bank lender and the home finance company will grow at a compound annual growth rate of 35%.
In 2021, Japan-based Sumitomo Mitsui Financial Group (SMFG) acquired a 74.9% stake in Fullerton India Credit Co for around $2 billion.
The remaining 25.1% stake is held by Fullerton Financial Holdings, a wholly owned subsidiary of Temasek Holdings.
“There is enough capital with the shareholder at the moment even after the acquisition. The listing question is not being considered right now. There are regulations that we have to adhere to once we become an upper later NBFC. We will cross that bridge when we get there,” Mitra said.
The consolidated assets under management of SMFG India grew 44% year-on-year(y-o-y) to Rs 36,600 crore as on March 31. It disbursed loans worth Rs 28,300 crore in 2022-23.
Around 28% of the company’s loan portfolio comprises of personal loans for salaried customers and 17% comprises business loans. In addition to this, it also provides commercial vehicle and micro loans.
The non-bank lender clocked a return on equity of 14.7% in 2022-23, which it intends to increase to 15-18% going ahead.
SMFG India’s net non-performing asset ratio improved to 2% as on March 31 from 3.1% a year ago.
Similarly, the net non-performing asset ratio of the home finance subsidiary improved to 2.3% as on March 31 from 3% earlier.