HDFC moots Rs 450-cr special provision in Q4

The special provision was made on voluntarily and not on account of any regulatory requirement

Mortgage major Housing Development Finance Corporation (HDFC) is planning to make an additional one-time special provision of Rs 450 crore in the fourth quarter ended March 2016, to further strengthen balance sheet.

It would use part of profits from sale investments (exceptional gains) to build an additional buffer against any unexpected risks in future. The provisions are subject to board approval, HDFC in a communication to the BSE said.

HDFC's profit from sale of investments in the fourth quarter of FY16 stood at Rs 1,520 crore (net of tax Rs 1,220 crore), compared with Rs 225 crore in Q4 of 2014-15. The income from dividend in the fourth quarter of FY16 was Rs 192 crore, compared with Rs 179 crore during January-March 2015.

The special provision is being made on voluntarily and not on account of any regulatory requirement, it said.

The profit for FY16 would include gains from the sale of shares in HDFC Standard Life Insurance Company to Standard Life. The insurance company is unlisted entity and the capital gains tax on the sale of shares is Rs 300 crore.

Meanwhile, the housing finance company sold loans worth Rs 4,799 crore to HDFC Bank in the fourth quarter ended March 2016 down from Rs 5,000 crore in the fourth quarter of FY15. Loans sold in last 12 months stood at Rs 12,773 crore.