HDFC Q1 profit at 17% on higher interest income

Total income rises 12.6% to Rs 5,557 crore over the same period.

Housing Development Finance Corporation (HDFC) on Friday said its standalone net profit for the quarter ended June 30 increased by 17 per cent to Rs 1,173 crore. The earnings growth, aided by higher interest income, was capped on account of absence of gains from sale of investments. On a consolidated basis, HDFC reported a 34 per cent year-on-year rise in profit after tax during the first quarter of this financial year. The consolidated net profit rose to Rs 1,707 crore, with share of gains from subsidiary and associate companies expanding to 31 per cent in the April-June period from 25 per cent a year earlier.

Its net interest income was up 17 per cent, while net interest margin was 3.9 per cent during the quarter.

The spread on loans over the cost of borrowings was 2.29 per cent. While it had made Rs 20 crore gains from sale of investments in the first quarter of 2011-12, it did not book any profit from investment sale in the first three months of this financial year. For the 34 consecutive quarter HDFC reduced the percentage of non-performing loans on a year-on-year basis. Its gross non-performing loan ratio was 0.77 per cent at the end of June, compared to 0.79 per cent a year earlier.

The mortgage lender has made provisions of Rs 1,326 crore, of which Rs 420 crore is on account of non-performing assets. The balance is in respect to general provisioning on standard loans and other provisions.

HDFC closed the quarter with a loan portfolio of Rs 176,993 crore, compared to Rs 148,262 crore a year ago. It sold Rs 6,310 crore loans in the preceding 12 months. The growth in individual loan book after adding back loans sold is estimated to be 31 per cent.

The company’s capital adequacy ratio was at 16.3 per cent, while tier-I capital was 14 per cent.

HDFC shares on Friday ended at Rs 799.70 crore on the National Stock Exchange (NSE), down 3.5 per cent from previous close.

“HDFC reported standalone earnings growth of 17 per cent, which was lower than our expectations, primarily on account of nil profit on sale of investments reported by the company versus our expectation of around Rs 70 crore. Healthy loan book growth and stability witnessed on the spreads, as well as on the asset quality front, were the key highlights of the results...We recommend an accumulate rating on the stock,” Vaibhav Agrawal, vice-president of research for banking sector at Angel Broking, said.