Dear Shareholders,

The year gone by has been a harbinger of hope, with robust performance in the face of unprecedented developments of the past three-and-a-half decades within the Company. It is my pleasure to inform you about the year’s developments and considerable progress in a spirit of confidence and hope. We continued to underline our role in enabling millions of aspiring Indians to realise their home ownership dreams.

We consider FY 2023-24 to be an interesting period of change and consolidation, as we accomplished a major overhaul of the organisational structure, a massive technology upgrade and a leadership change.

You will read about the first two strategic developments in the succeeding message, I am happy to share that in August 2023, Mr. Tribhuwan Adhikari was appointed as the Managing Director & Chief Executive Officer of LIC Housing Finance Limited. During his career spanning three decades, he has worked in different streams and gained knowledge and clarity.

During the year, we consolidated our position as India’s largest Housing Finance Company with an Outstanding Loan Portfolio of ₹ 2,86,844 crore and multiplied our footprint in the past decade. We expanded geographies, built a huge base of customers, expanded our outstanding loan book, strengthened distribution, and focussed on growth and digital transformation, generating more stakeholder value and contributing to India’s economic growth. As a matter of fact, we term FY 2024-25 as the “year of delivery” as we will then move to our new lending platform.

THE OPPORTUNITY MATRIX

The national real estate landscape has been on a stronger growth path and continued to experience a surge in end-user demand following a slowdown spanning several years. In FY 2023-24, not only was India the fastest growing economy globally, but also witnessed all real estate indicators at record levels. The tailwinds in India’s real estate sector originate from India’s economic resilience, despite escalating geopolitical situation and rising inflation.

Post-COVID pandemic, the need to have a good house has been pronounced with increased consumer confidence. With substantial pent-up demand from end-users, year-onyear sales across India’s top seven cities increased 31% in CY2023, as per data from Anarock Group. Key pillars supporting growth across real estate segments include: the highest GDP growth forecast among major economies, and a proactive and supportive business environment.

The Finance Minister’s announcement for 20 million houses under the Prime Minister Awas Yojana is also giving an impetus to growth. With its “Housing for All” initiative, India proposes to build 29.5 million houses under the Prime Minister Awas Yojana (PMAY) by 2024.

Demand increased owing to urbanisation, importance of home ownership, growing population and rising incomes, demonstrating India’s prominence as one of India’s fastest growing sectors. The Residential sector witnessed robust demand revival, as it fast gained momentum and withstood market volatility.

HOUSING FINANCE – ON AN UPSWING

India’s housing finance market is on a growth trajectory with the Government taking adequate measures to support housing finance, improving demand and reviving the sector. Growth in housing credit can be attributed to a strong revival in the residential property market due to the pent-up demand post-COVID pandemic.

Driven by India’s changing demographic profile, rising incomes, enhanced affordability, and substantial government support. An improving macro-economic environment, rapid pace of urbanisation, nuclearisation of families, and affordable mortgages are aiding the industry.

Other key drivers are the emergence of Tier 2&3 cities, easier access to financing, tax incentives, and the expanded reach of housing finance companies. With millennials and young borrowers in need of urban accommodation are a potential consumer base for housing loans, accounting for nearly 27% of borrowers today.

A GROWING POTENTIAL IN AFFORDABLE HOUSING FINANCE

India’s mortgage-to-GDP ratio stands at a mere 11%, significantly lower compared to the United States (67%) and the United Kingdom (90%). With a large portion of India’s population residing in small towns, there is a substantial opportunity for housing finance companies, particularly those targeting low and middle-income segments.

Affordable Housing is projected to bring in the next wave of growth in India’s housing finance sector. More and more companies are now tapping into this space and addressing the huge credit crunch, focussed on catering to the lower income group. This segment is emerging as a significant opportunity and shows a lot of promise due to under-penetration and driven by a substantial demand for low-cost housing among India’s rural and middle-class population.

AUGMENTING THE CORE

At the core of LIC Housing Finance is the mission to increase our share of Affordable Housing Finance. Our key objective is to broaden the net of financial and economic inclusion by providing a sense of security and ultimately creating customer delight. With this, our aim is to empower people who have always dreamt of owning a house, without adequate means to achieve it. We are targeting at helping this segment of the society build homes.

As the leader in India’s Housing Finance industry, we also understand our social responsibility and made total sanctions of ₹ 48,000 crore by consistently contributing to Phase 1&2 of PMAY and to the government’s CLSS scheme. Aligned with the government’s initiative of “Housing for All”, our core strategy entails facilitation of financial inclusion through a wider spread. We are committed to serving home buyers from the low-income groups of the economy and seek to offer better access to customer-centric solutions and simultaneously provide the benefit of PMAY to the eligible segment.

WAY FORWARD

As the transformative journey of LIC Housing Finance continues, with our ability to source low-cost liability from strong fundamentals, we improved our liability management and ensured that despite rising rates, we are working on cost optimisation and enjoy being one of the lowest on cost of funds, despite the monetary tightening measures of the Reserve Bank of India. We are also better placed on liabilities vis-à-vis other players.

Going forward, our key focus area continues to be – higher yield productivity with proper due diligence to mitigate risks, increase per branch business; and enhance per employee productivity.

The rapid pace of finance, affordable mortgages, increased urbanisation and changing lifestyles continue to spur growth of India’s Housing Finance Market, which is projected to grow by 20% CAGR between 2022-2027. Demand is visible across sectors and loan segments, with small towns and affordable loans having taken a huge lead.

IN CONCLUSION

At LIC Housing Finance, we continue living our dream of building a roof for every Indian by supporting Affordable Housing and serving new home buyers and complementing Housing for All.

Our proactive approach is on capitalising growth opportunities within the housing finance sector, aimed at presenting us as a forward-thinking, resilient, and innovative company ready for future opportunities, while accelerating current growth momentum.

I thank all our stakeholders for their trust, support, guidance and good wishes. The journey ahead is long and interesting and together we will continue to grow with resilience.

I am positive the best is yet to come

Sincerely,

Siddhartha Mohanty

Chairman & Non-Executive Director