Home Loans to Drive Business in Coming Quarters: IIFL Finance MD

IIFL Finance's growth during the third quarter was led by a sharp recovery in gold loans, while management expects momentum in mortgages -- home loans and loans against property -- to pick up over the ensuing quarters, its managing director Nirmal Jain said.

IIFL Finance's home loan asset under management (AUM) grew by 5 per cent to ₹31,893 crore while gold loan AUM surged 1894% to ₹43,432 crore in the December quarter.

These secured segments now account for the bulk of the loan book, reflecting a shift away from higher-risk and more volatile portfolios that had weighed on performance in earlier periods, he told PTI.

"This rebalancing has helped stabilise cash flows and reduce earnings volatility. Asset quality trends improved sequentially, with gross and net NPAs declining across businesses and provision coverage remaining elevated," Jain said.

During the third quarter, gross NPAs of the NBFC firm moderated to 1.6% as compared to 2.4% at the end of December 2024. Similarly, Net NPA also eased to 0.8% as against 1% in the third quarter of FY'25.

Credit costs have begun to ease as legacy stress from discontinued portfolios runs down, and management expects further normalisation as the portfolio mix tilts decisively towards secured lending, he said.

"We believe the hardest part of the clean-up is behind us. As legacy portfolios reduce and secured businesses scale up, the focus is now on consistent growth with strong risk controls and predictable asset quality," he said.

The improving credit profile is beginning to intersect with operating leverage, he said, adding IIFL Finance has built a large physical distribution network over the years, and as volumes recover, particularly in gold loans, incremental growth is expected to translate into disproportionate gains in profitability.

This is being supported by the increasing use of technology and artificial intelligence across credit assessment, monitoring, and operations. AI-led workflows have shortened turnaround times, lowered operating costs, and improved customer experience, he said.

Bank partnerships are also emerging as a key growth lever and the company has expanded its co-lending and direct assignment arrangements with banks, benefiting from clearer regulatory frameworks and steady demand for priority-sector retail assets, he said.

"With asset quality stabilising, credit costs moderating, and operating leverage beginning to play out, IIFL Finance appears to be entering a more predictable phase of earnings growth. Execution over the coming quarters will determine whether this alignment translates into sustained improvement in profitability," he said.