HDFC net up 23% on strong disbursals

Spurred by good growth in home loan disbursals, the country’s largest mortgage financier HDFC reported a 23 per cent rise in net profit to Rs 671 crore in the December 2009 quarter from Rs 546 crore in the year-ago period.

Although total income fell 6 per cent to Rs 2,762 crore, the bottom line was pushed up by a Rs 52-crore profit on sale of investments against a loss of Rs 0.35 crore in the year-ago period.

The lender also managed to put a squeeze on interest costs, which fell 17 per cent to Rs 1,704 crore from Rs 2,042 crore in the corresponding quarter last year. As a result, total expenditure fell 16 per cent to Rs 1,805 crore from Rs 2,143 crore in the quarter ended December 31, 2008.

Lower cost of funds also helped push the net interest margin up from 4.19 per cent to 4.25 per cent a year ago.

Reflecting the strong demand for home loans, approvals during the third quarter grew by 31 per cent to Rs 12,692 crore compared to Rs 9,640 crore in the year-ago quarter.

Over the same period, disbursals grew 18.6 per cent to Rs 11,185 crore. In the previous quarter, growth in disbursements had nearly touched 30 per cent, fuelled by a pent-up demand for home loans.

Retail loans to individuals grew 9 per cent compared to the September 2009 quarter and made up 70 per cent of the HDFC’s loan book as of December 31, 2009.

“We should see around 20 per cent loan growth for the whole year,” said Keki Mistry, vice-chairman and chief executive officer of HDFC.

After initially dismissing fixed-cum-floating rate products as a marketing gimmick, the lender introduced this scheme in December last year. The financier hopes to disburse Rs 3,500-4,000 crore of loans under this scheme in January. "Our margins will not be affected by this scheme since our cost of funds for the first two years is 6.1 per cent. So we will be able to maintain a spread of 2.2 per cent,” said Mistry.

The mortgage financier’s gross non-performing assets as a percentage of total advances fell to 0.94 per cent from 1.01 per cent in the December 2008 quarter. Its capital adequacy ratio, which is capital as a percentage of total risk-weighted assets, was 14.8 per cent as of December 31, 2009.

The lender’s share price rose 0.55 per cent on the Bombay Stock Exchange to end the day at Rs 2,524.1.