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Dolat Capital Report
Home First Finance Company Ltd. reported a good quarter with strong assets under management growth (36% YoY/8% QoQ), sequentially higher spreads, and continued improvement in asset quality metrics. Consequently, net interest income grew by 50% YoY. Lower income from direct assignments during the quarter impacted other income, with in-line profit after tax growth of 39% YoY.
Spreads at 5.8% benefitted from moderation in borrowing costs. While spreads are likely to moderate hereon as borrowing costs rise, increasing loan against property proportion and recent rating upgrade will limit the impact.
Further, Home First Finance Company's net interest margin will also benefit from utilisation of excess liquidity. We believe that despite a high share of floating loans, the transmission of rate hike to borrowers is likely to be limited as the decline in cost of funds in recent past was also not passed on.
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