Mumbai, Jan 19 (Agencies): Controversy-mired LIC Housing Finance on Wednesday posted an impressive 39 per cent jump in its net profit at Rs 213.49-crore for the third quarter of FY 11, which saw its CEO getting caught in the bribes-for-loan scam.

The company's net profit in the corresponding October-December period in 2009 was Rs 153.57-crore and its newly-appointed Chief Executive V K Sharma said the numbers would have been much better had it not been for the controversy.

"It would have been much, much better if not for the incident (bribes for loan scam)," Sharma told PTI.

The housing finance subsidiary of life insurance giant LIC did not disburse to project proposals from corporate through December in the aftermath of the scandal unearthed by the CBI in late November, Sharma said, adding disbursements to projects will start tomorrow.

Ramachandran Nair, the then CEO of the company, was arrested along with seven others for allegedly giving loans against bribes in November. Sharma had to be hastily put in charge of operations as a fall-out.

Sharma said all the loan accounts of nine corporate totalling Rs 389-crore which are under scrutiny are performing well and in fact, two of the corporates having an outstanding of around Rs 120-crore have also expressed a desire to prepay.

As of December 31, total outstanding from builders stood at Rs 4,586-crore with the gross non-performing assets at 0.08 per cent.

As a fall-out, LICHF has revised its systems and processes while lending, Sharma said, adding it will not be lending afresh to the nine corporates under the scanner.

The jump in net profits was helped by a 55 per cent rise in net interest income to Rs 352-crore while Sharma said the retail lending business, which constitutes nearly 90 per cent of the total pie, grew in a very healthy way.

In times of liquidity crunch and rate hikes, the company was able to widen its net interest margins (NIM) to above-the-expectation 3.14 per cent as against 2.93 per cent in the year-ago period.

The lender's net NPA for the reporting quarter came down to 0.18 per cent as against 0.77 per cent year-ago.

Sharma said a circular from sector regulator National Housing Bank (NHB) to increase provisions on teaser loans prompted the bank to make a higher provision at Rs 234.92-crore which ate into operating profits.

Sharma said the company stands well capitalised as of now but also hinted at a fresh round of capital raising in the next fiscal, without divulging the route it planned to take for the same.