HDFC Q2 net up 18% at Rs 1,605 crore

Total income rises 12.5% to Rs 7,466 crore

Mortgage lender Housing Development Finance Corporation (HDFC) has posted a 18.19 per cent rise in standalone net profit for the second quarter ended September 30 to Rs 1,604.56 crore due to growth in business, bad loans remaining under control and lower operating costs and more importantly, the positive impact from dividend inflows (including from HDFC Bank) this quarter.

Last financial year, the company had received dividend from HDFC Bank in the June quarter. However, the profits were marginally below Bloomberg estimates of Rs 1,644.4 crore.

“We got dividend income this quarter, which was not there in the previous quarter. Our business grew, non-performing loans remained under check and costs were low. Operating costs have actually been low this quarter,” said Keki Mistry, vice-chairman and CEO of the company.

As on September 30, the loan book grew by 12 per cent year-on-year and was at Rs 2,37,991 crore against Rs 2,12,344 crore in the year-ago period. Loans sold in the preceding 12 months amounted to Rs 12,969 crore.

The growth in individual loan portfolio is 23 per cent (after adding back loans sold in the preceding 12 months), while the growth in the non-individual loan portfolio stood at eight per cent. The growth in the total loan book, after adding back the loans sold in the preceding 12 months, is 18 per cent.

Of the total loan book, individual loans comprise 73%. The average size of the individual loans stood at Rs 23.6 lakh. As at September 30, the total loans outstanding in respect of loans sold/assigned stood at Rs 29,125 crore. HDFC continues to service these loans and is entitled to the residual interest on the loans sold. The residual interest on the individual loans sold is 1.22% per annum and is being accounted over the life of the loans and not on an upfront basis.

Spread, which is the difference between lending rate and borrowing rate, if compared with September of last year had gone up by 3 basis points. It was 2.29% in September last year and now at 2.32%. This is exactly the level of spreads which was there as on March 31. On June 30, spread was 2.31%.

"If we were to look at the spreads between individual business and non-individual business, individual spreads at the end of the quarter stood at 1.97% and non-individual spreads stood at 3.1%," said Mistry.

Gross non-performing loans as at September 30 amounted to Rs 1,707 crore. This is equivalent to 0.71% of the loan portfolio compared with 0.69% in the previous year. The non-performing loans of the individual portfolio stood at 0.53% while that of the non-individual portfolio stood at 1.12%.

As per the National Housing Bank (NHB) norms, the HDFC is required to carry a total provision of Rs 1,797 crore. The balance in the provision for contingencies account as at September 30 stood at Rs 2,127 crore of which Rs 518 crore is on account of non-performing loans and the balance Rs 1,609 crore is in respect of general provisioning on standard loans and other provisions. This balance in the provision for contingencies is equivalent to 0.89% of the portfolio. HDFC carries an additional provision of Rs 330 crore over the regulatory requirements.

Monday, the shares of HDFC ended at Rs 1,312.85 on BSE, down 2.13%.