HDFC Q3 net up 7% at Rs 1,521 crore

Lower income on investments, high provisions impact pace of profit growth

Mortgage lender Housing Devel-opment Finance Corporation (HDFC) posted a a mere 6.7 growth in standalone net profit at Rs 1,521 crore for the third quarter ended December 2015, on lower income from investments and higher provisions for standard loans. A Bloomberg poll had pegged net profit at Rs 1,564 crore for the December 2015 quarter.

It had posted a net profit of Rs 1,425 crore in October-December 2014 (Q3FY15).

On lower pace of profit growth, Vice-Chairman & Chief Executive Officer Keki M Mistry said a dip in income from leased properties, lower earning on shareholders' funds and non-interest income impacted the bottom line in the third quarter.

Non-interest income - profits from sale of investments in Q3 - was Rs 57 crore, down from Rs 113 core in Q3 of FY15. The income from leased properties was a mere Rs 1 crore against Rs 17 crore in the corresponding quarter of FY15.  The growth in the non-individual loan portfolio picked up, showing net increase of Rs 1,987 crore for the reporting quarter. Accordingly, HDFC made higher provisions for standard assets at Rs 68 crore against Rs 45 crore in the third quarter of FY15.

If adjusted for these factors, the profit growth for the quarter would have been approximately 15 per cent, Mistry said.

The spread on loans over the cost of borrowings for the nine months ended December 31, 2015, was stable at 2.31 per cent, the same as April-December 2014. The spread on the individual loan book was 1.97 per cent and on the non-individual book was 3.09 per cent. Net interest margin for the nine months ended December 2015 was 3.85 per cent. Income from operations grew by 7.4 per cent year-on-year to Rs 7,259 crore.

The loan book rose to Rs 2,48,097 crore at the end of December 2015, up from Rs 2,19,939 crore a year ago.

Of the total loan book on assets under management (AUM) basis, individual loans comprised 73 per cent. The average size of the individual loans stood at Rs 25 lakh.  Gross non-performing loans as at the end of December 2015 amounted to Rs 1,794 crore (0.72 per cent).

The corporation's capital adequacy ratio stood at 17.7 per cent, of which Tier-I capital was 14.2 per cent and Tier-II capital was 3.5 per cent. On a consolidated basis, HDFC's income from operations increased 3.5 per cent to Rs 12,240 crore while net profit was up 11 per cent to Rs 2,419 crore compared to the year ago quarter.

The results came post market hours. On Wednesday, the HDFC scrip closed 0.55 per cent lower at Rs 1,167.70 on the BSE.