LIC Housing Finance Q4 FY25 profit up 25% to ₹1,368cr

Key takeaway from the quarter

LIC Housing Finance reported a sharp year-on-year jump in profitability in Q4 FY25, helped mainly by a steep drop in provisions for bad loans. The mortgage lender posted net profit of ₹1,367.96 crore for the quarter ended March 2025, up 25% from ₹1,090.82 crore in the same quarter last year. The company said lower provisions supported the bottom line. At the same time, margins were lower than last year as competition and interest-rate conditions weighed on spreads. Disbursement growth remained positive, with individual home loans leading the increase.

Profit growth driven by lower provisions

The biggest swing factor in the results was provisioning. Provisions were ₹109 crore in Q4 FY25 compared with ₹428 crore a year earlier. The company also reported a reduction in aggregate provisions for expected credit loss (ECL) as of March 31, 2025, to ₹4,899.03 crore from ₹6,270.06 crore in the previous year. The combination of lower quarterly provisioning and a lower ECL provision stock helped lift reported profit even as net interest income dipped year-on-year.

Revenue up, but NII declines

Operations revenue increased 5% year-on-year to ₹7,283.33 crore in Q4 FY25 from ₹6,936.41 crore in Q4 FY24. Despite this revenue rise, net interest income (NII) fell 3% to ₹2,166.44 crore from ₹2,237.60 crore. The net interest margin (NIM) for the quarter came in at 2.86%, down from 3.15% in Q4 FY24.

The company noted that NIM improved compared with the previous quarter. Q4 FY25 NIM improved by 16 basis points quarter-on-quarter to 2.86%, based on the data shared in the coverage. Still, the year-on-year decline highlights that pricing and funding conditions were tighter than the same period last year.

Disbursements rise; home loans lead growth

Loan disbursements increased 5% year-on-year to ₹19,156 crore in Q4 FY25 from ₹18,232 crore in Q4 FY24. Within this, individual home loan disbursements grew 8% year-on-year to ₹15,383 crore. Project loan disbursements fell sharply, down 42% year-on-year to ₹875 crore.

In an earnings interaction referenced in the provided text, the company also pointed to sequential momentum in disbursements. Disbursements were described as up 24% sequentially, while AUM growth over the same period was stated at 3% sequentially. The gap between faster disbursement growth and slower AUM growth was discussed during the interaction.

Asset quality improves as Stage 3 exposure declines

Asset quality indicators improved compared with last year. Stage 3 exposure at default stood at 2.47% as of March 31, 2025, compared with 3.31% as of March 31, 2024. It also improved sequentially from 2.75% as of December 31, 2024.

Separately, management commentary in the transcript indicated gross NPA was at 2.46 with a stated target of 2.2 for the year. These figures in the interaction align with the broader theme of improving asset quality in the reported period.

Management guidance: double-digit growth, margin band

MD and CEO Tribhuwan Adhikari said the company expects double-digit growth in disbursements and the loan book in the year ahead. In the CNBC-TV18 interaction excerpt, the company said AUM growth is expected to be in the range of 10% to 12% in FY26.

On margins, management commentary indicated the company ended the year at 2.72, within earlier guidance of 2.7% to 2.9%. For the next year, the stated margin expectation in the interaction was a band of 2.6% to 2.8, with management describing it as a “tight rope walk” to maintain margins.

Street view: margin pressure remains a key debate

One brokerage view in the provided text said NIMs could remain under pressure due to competition from banks and NBFCs and a volatile interest rate scenario. Another note said LIC Housing Finance’s Q4 FY25 net interest income and pre-provision operating profit were in line with estimates, while profit after tax (PAT) was below estimates due to higher-than-expected provisions.

These views reflect a typical market focus for mortgage lenders: whether disbursement growth can be sustained while protecting margins, and whether credit costs remain contained.

Earlier-year context: FY24 quarter had weaker profit and dividend announcement

The provided material also includes an earlier report for the March quarter of FY24, when LIC Housing Finance reported a 7.5% year-on-year fall in net profit to ₹1,091 crore, compared with ₹1,180 crore. That earlier report also stated the board recommended a 450% dividend for FY24, translating to ₹9 per equity share of face value ₹2, subject to shareholder approval.

This context highlights how Q4 FY25 marks a clear rebound in reported profitability versus the year-ago quarter, driven largely by lower provisions.

Key numbers at a glance

Why this quarter matters for investors

Q4 FY25 results show that profit growth was led by a large reduction in credit costs rather than expansion in core spread income, given the year-on-year decline in NII and NIM. Disbursement growth remained positive, but segment mix shifted, with individual home loans growing and project loans falling sharply. Asset quality indicators moved in the right direction, with Stage 3 exposure improving both year-on-year and sequentially.

The near-term debate, based on management commentary and brokerage notes in the provided text, is around sustaining growth while operating within a tighter NIM band. The company’s stated guidance of 10% to 12% AUM growth in FY26, and the margin expectation of 2.6% to 2.8, sets reference points for upcoming quarters.

Conclusion

LIC Housing Finance’s Q4 FY25 earnings were marked by a 25% rise in net profit to ₹1,367.96 crore, aided by a sharp fall in provisions to ₹109 crore and improved asset quality metrics. Revenue rose modestly, but NII declined and NIM was lower than last year at 2.86%, despite improving quarter-on-quarter. Management has guided to double-digit AUM and disbursement growth in FY26 and indicated an expected margin band of 2.6% to 2.8, which will be closely watched in subsequent quarterly updates.