HDFC net up 24% in Q2

Mortgage lender Housing Development Finance Corporation (HDFC) has posted a 24 per cent rise in net profit for the second quarter ended September 2009 at Rs 663.94 crore from Rs 534.23 crore in the comparable quarter a year ago.

Total income for the reporting quarter rose to Rs 2,850.23 crore from Rs 2,620.59 crore a year ago. The income from operations rose to Rs 2,783.54 crore from Rs 2,592.54 crore.

Its income from sale of investments rose over 2.5 times to Rs 61.29 crore in the quarter.

The spread on loans over the cost of borrowings was for the half-year ended September 30, 2009 stood at 2.20 per cent.

Its Vice-Chairman and Managing Director Keki Mistry said the company expected the spread to be in the band of 2.15-2.25 per cent as in the last five years.

Net profit for the six-month period rose by 23 per cent to Rs 1,228.86 crore from Rs 1,002.34 crore.

Its outstanding loans grew 10 per cent to Rs 89,519 crore. Loan approvals were up 18 per cent to Rs 28,418 crore as compared to Rs 24,180 crore in the corresponding period last year.

UPWARD MARCH
(Rs crore)	Sep ‘09	% chg*
Income from  operations	2,783.54	7.37
Total income	2,850.23	8.76
Int. expended	1,836.51	4.51
Total expended	1,937.29	4.12
Net profit	663.94	24.28
* over Sept 2008

Disbursals amounted to Rs 22,342 crore in April-September 2009 compared to Rs 17,788 crore in same period last year, representing a growth of 26 per cent.

Mistry said credit offtake in the remaining part of year would be better. Loan sanctions as well as disbursals are expected to grow at 20 per cent annually. Growth in the third quarter (October-December 2009) is likely to be better on the back of a weak performance in the same period last year. Demand in the economy decelerated after September 2008 in the aftermath of the global financial crisis.

He further added that apart from low interest rates and houses being affordable (houses cost about 4.5 times the annual income), there were fiscal (tax) benefits which would support demand for home loans.

In the twelve months ended September 2009, total assets rose by 17 per cent to Rs 1,04,544 crore. The lender sold loans worth Rs 6,100 crore in the period. Together with sold loans, the growth in the loan book would have been higher at 18 per cent.

Its gross non-performing loans stood at Rs 860.21 crore. This is equivalent to 0.95 per cent of the loan portfolio as against 1.04 per cent last year. For the nineteenth consecutive quarter, the non-performing loans have been lower than the corresponding quarter end in the previous year.

Mistry said gross NPAs have continuously declined over quarters. This has become possible due to a variety of factors.

The average loan to value ratio is 68 per cent, meaning person pays huge equity (invest personal funds) upfront to purchase house. Also, the repayment for loans begins soon on disbursement of credit.

HDFC had made a provision of Rs 362.21 crore in respect of non-performing assets and general provision on outstanding standard non-housing loans. Its provision for contingencies account stood at Rs 671.98 crore.

Its capital adequacy ratio was 14.9 per cent of the risk-weighted assets, higher than the minimum requirement of 12 per cent. The Tier-I capital adequacy was 13.4 per cent as against a minimum requirement of 6 per cent.