HDFC Net Up 17% in March Quarter on Strong Retail Demand

Housing Development Finance Corp, India’s largest mortgage lender, said March quarter profits rose 17% aided by strong demand from individual borrowers and forecasts 18-20% loan growth this year, though it remained silent on reducing lending rates. Its net profit rose to . 1,552 crore in the quarter from . 1,326 crore a year ago. Demand for loans from individual segment advanced 31% during the last fiscal year. Its total loans rose to . 1.70 lakh crore, from . 1.40 lakh crore.
“We saw loan demand coming from individual homebuyers in the periphery of Delhi NCR, Mumbai, Chennai and Pune,” said Keki Mistry, vice-chairman and CEO, HDFC. “Our strategy is to fund twothird of individual loans.” Mistry expects prices to fall in Mumbai where they have risen to the earlier peak seen in 2007. Net interest income grew 14% to . 2,121 crore, from . 1,867 crore. The company will pay a dividend of . 12.50 a share.
“The positive is that individual loan book is growing at 30%, while the industry is growing at 18-20%,” said Vaibhav Agarwal, analyst, Angel Broking. “HDFC has an advantage over other banks as it processes loans faster. Customers do not mind paying 20 basis points higher if their loans are getting processed faster.” The company made a provision of . 145 crore against . 80 crore. The provision was mainly in respect of standard assets as a result of change in the provisioning norms for standard assets.
On the credit quality front, HDFC did not see stress from loans. Its non-performing loans to individuals rose 0.58% from 0.55%, while corporate loans dropped to 0.91% from 1.05%. It maintains additional provisions of . 286 crore over the regulatory requirement. The spread on loans over the cost of borrowings for the year was at 2.30%. Net Interest Margin for the year was 4.2%. The growth in the individual loan book, after adding back loans sold, is 31%. Non-individual loans grew by 13%. “There is tax benefit announced in the Budget for housing loans below . 25 lakh. This is expected to increase demand for loans in this segment and people will borrow before March 2014 to avail the benefits,” said Mistry.
Average ticket size of loans grew to . 21.6 lakh, from . 19.5 lakh and average cost of apartment sold is . 33 lakh, up from . 30 lakh. The individual loans segment accounted for 81% of incremental growth. Individual loans comprise 68% of the total loans, and remaining corporate.
During the quarter, HDFC Life Insurance, HDFC Asset Management reported drop in profit to . 154 crore and . 124 crore, respectively. For the year, the life insurance segment posted a profit of . 451 crore, while asset management posted a profit of . 318.8 crore. HDFC reported 22% increase in consolidated profit after tax to . 6,639.7 crore for the year ended March 31, 2013.

Source :The Economics Times.
Date : 09/05/2013

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