Mumbai, Feb 14 (PTI) Non-bank real estate (AUM), which grew 10 percent in 2021, is likely to decline further by 5-10 percent in 2022 and stabilize next year.
The performance of non-banking entities (non-bank financial companies and housing companies) has been hampered in recent years by a number of problems, as entities face problems in raising funds and problems in the quality of their assets. , said the domestic rating agency Icra Ratings in a Monday report.
Consensus for companies to focus on nonprofits remains negative due to the medium to the long-term sustainability of good assets and growth prospects at least, the agency said.
Assets under the management of non-bank real estate fell by 17.64% from 3.4 million rupees in March 2019 to 2.8 million rupees in March 2021.
The ICRA expects further reductions of 5 to 10% in the current financial year. It expects to remain flat in fiscal 2023 (0-5% growth),” the agency said.
Samriddhi Chowdhary, Vice President and CEO of the company (Financial Analysis Review), said growth in non-financial markets has slowed since the second half of fiscal 2019 after the financial crisis and led to a reduction in expenses.
The long-term protection of investors and other stakeholders had a greater impact on wholesale finance with larger assets compared to retail store operations.
“Due to the financial crisis, companies have focused on non-bank companies trying to secure securities by reducing the supply of shares by selling real estate, with restrictions on additional spending for these projects”, Chowdhary said.
The agency said non-bank banks also saw a drop in their assets since fiscal 2019, given the decline in the following activities.
Total non-performing loans to non-performing loans (GNPA) increased from 2.1% in March 2019 to 5.1% in March 2020 and have been increasing since then.
It increased further to reach 6.2% in March 2021 and 6.8% in September 2021.
The rating agency expects real estate GNPA to increase spending by 180 to 250 basis points by 2022.
However, players with multiple mortgages on the estate will see an increase in NPAs, he said. The agency says non-bank properties have seen an improvement in their capitalization profiles since March 2018, driven by modest AUM growth combined with a substantial capital increase in an effort to strengthen their holdings.
It is estimated that the capital cushion for non-banking real estate entities increased by 4 percent from March 2019 to March 2021.
Current levels of investment also allow losses to be absorbed.
The agency expects revenue to be slightly weaker in the current fiscal year and flat in fiscal 2023 unless there are new business restrictions due to the contagion. The ability of non-bankers to manage mortgage rates will also be critical, he said. PTI HT MR
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