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Indiabulls Housing Finance Limited (IBHFL), the country’s second largest housing finance company, registered a net profit of Rs 11.67 billion for the quarter ending December 31, 2017. On the sequential basis, IBHFL’s net profit has risen 35 per cent from Rs 8.61 billion from the quarter ending September 2017.
On the year-on-year basis, net profit rose by 55.4 per cent from a net profit of Rs 7.52 billion realised during the quarter ending December 31, 2016.
“There are two aspects to the rise in net profits, one part is a normal profit of 24 per cent, and the other is where we sold one-third of our stake in OakNorth Bank limited for Rs 7.70 billion. From that, after providing one-third of the profit as provisions and post-tax, we have an additional profit of Rs 2.40 billion,” said Ashwini Kumar Hooda, deputy managing director at IBHFL.
If the company were to not account for this Rs 2.4 billion additional profit, they would have realized a net profit of Rs 9.3 billion, at a growth rate of 24 per cent during Q3 FY2018, as against a net profit of Rs 7.52 in Q3 FY2017.
Net interest income (NII) for Q3 FY2018 stands at Rs 14.1 billion. The company’s NII has grown by 23.6 per cent, y-o-y, once adjusted for one-time gains on the investment book in both FY2017and FY2018.
The revenues have increased 36.7 per cent, on a y-o-y basis, from Rs 30.05 billion in Q3 FY2017 to Rs 41.05 billion during Q3 FY2018. This means that the revenue earnings for Q3 FY2018 are 22 per cent higher, on a sequential basis, than the total revenues of Rs 33.42 billion realised during Q2 FY2018.
Total loan assets have grown 31.8 per cent between Q3 FY2017 Rs 814.22 billion and Q3 FY2018 Rs 1073.28 billion. The total loan outstanding stands at Rs 1.07 trillion, while the cumulative value of loans disbursed till data stands at Rs 1.96 trillion.
IBHFL’s balance sheet has a compounded annual growth rate (CAGR) of 26 per cent, revenues of 29 per cent CAGR, and a CAGR of 28 per cent with regards to the company’s loan assets.
When asked about the interest in and growth of the affordable housing segment, and certain concerns surrounding the sector, Hooda told the Business Standard,” According to an RBI report, before the Pradhan Mantri Awas Yojana (PMAY) there were only 6 cities out of the top 25 cities in the country, that were affordable. But now with the PMAY scheme, 21 out of these 25 cities have become affordable to a customer especially from the middle-class segments.”
“It’s only in March and April that the notification came from the government; we believe this calendar year (2018) will be the year where more people take a decision, after evaluating their options. People will start taking and executing decisions this year,” he said.
The company's cost to income ratio has improved from 13.8 per cent in Q3 FY2017 to, 12.5 per cent in Q3 FY2018.
The gross non-performing asset (G-NPA) ratio is at 0.77 per cent, and the net-NPA ratio is at 0.31 for Q3 FY2018, compared to 0.85 per cent (G-NPA) and 0.36 per cent (N-NPA) at the end of Q3 FY2017. As at December 31, 2017, there was Rs 825 billion worth of NPAs with IBHFL.
When asked about concerns surrounding recent defaults in affordable housing, Hooda said, "We are mostly in the "upto Rs 10 lakh and below Rs 20 lakh segment," (Rs 1 million to Rs 2 million) where for housing finance companies the NPA levels have come down from 0.8 per cent to 0.7 per cent, Whereas for the "above 25 lakh" (Rs 2.5 million), the NPA level is around 5 per cent. So there are no concern for these "Rs 20 to 50 lakh" (Rs 2.5 million to Rs 5 million) home loans, which is where our sweet spot is, additionally, for us these numbers would be around 0.25 per cent to 0.3 per cent in terms of pure home loan NPAs"
During FY 2016-2017, housing loans under Rs 2.5 million grew by 33 per cent, as compared to a -0.5 per cent for housing loans above Rs 2.5 million. The housing loans below Rs 2.5 million constitute 76 per cent of all home loan disbursals, 70 per cent higher than the previous year.
Earnings per share have increased from Rs 17.77 (Q3 FY2017) to Rs 27.45 (Q3 FY2018), which is a 54.5 per cent increase.
The IBHFL’s total borrowings have increased from Rs 0.83 trillion in December 2016, to Rs 1.02 trillion on December 31, 2017. The proportion of bank loans that the company uses as a source of funding has come down, as IBHFL has moved towards debentures and securities’ markets as sources for capital.
Hooda told the Business Standard, “We are taking advantage of our financial flexibility. Bonds are still cheaper than bank term loans, so it is about your ability and financial flexibility to fund either through bonds or banks. If these bond yields remain high and if then they are still cheaper than banks, then I will resort to borrowing from the banks. But I feel it is temporarily high and from April onwards, it will come down after which I can borrow more aggressively from the bond market”
During March and December 2017, IBHFL raised Rs 346.6 billion and Rs 387 billion, respectively, from bank loans, and at the same time raised Rs 480.5 billion and Rs 604 billion from the securities/debenture market. Clearly, IBHFL more was raised between March and December 2017 from the non-banking sources.
IBHFL has announced an interim dividend of Rs 14 per share, of the face value of Rs 2 per equity share. Out of this Rs 14, Rs 5 is being distributed as profits made from the 10 per cent sale of IBHFL’s stake in Oark North Bank.
IBHFL issued an aggregate of 1,551,604 equity shares of face value Rs. 2 each, which brings the total paid-up equity share capital of the company to Rs 851,865,488.