BQ Blue's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BloombergQuint's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
ICICI Securities Report
In this report, we attempt to directionally gauge the impact of liquidity coverage ratio requirement on housing finance companies that came into force with-effect-from Dec 2021. Our objective is to assess if HFCs need to earmark further liquidity for the LCR requirement and pose a consequent drag on net interest margins (if any).
With Housing Development Finance Corporation Ltd. disclosing in its business update that it is carrying Rs 270 billion of unencumbered high quality liquid asssets, held entirely in G-Sec, to meet the minimum required LCR of 50%, it becomes equally relevant to understand the LCR requirement impact on other HFCs too.
HDFC's LCR high quality liquid asssets equivalent to 4.0-5.0% of its asset base appears high with 4-8 basis points adverse implication on NIMs.
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