Hdfc Rules Out Merger With Bank

Housing Development Finance Corporation (HDFC) today ruled out its merger with HDFC Bank and creation of a universal bank.

"We don't need to merge to have a larger denominator to bring down our non-performing assets (NPAs)," Parkeh said at the company's 25th annual general meeting here today. The implicit reference was perhaps to another financial institution which recently merged with its bank.

Parekh said the merger in case of HDFC will not have any impact on its cost of funds. HDFC's borrowing cost is now at 11.41 per cent and lending cost 13.37 per cent translating into a spread of 1.96 per cent. Incidentally, its spread actually went up by 10 basis points from 1.86 per cent this year.

Parkeh said the soft interest rate scenario will continue for six months to a year and the rates can actually come down by 50 basis points to one percentage points unless the border standoff flares up.

HDFC's NPAs are at .91 per cent and the list of loan defaulters includes Asla, DCM, South Indian Viscose and certain other smaller firms.

As far as the performance of the HDFC subsidiaries is concerned, HDFC Standard Life Insurance Company Ltd with its presence in over 35 locations, has in the first quarter undertaken business worth Rs 800 crore in terms of sum assured.

HDFC Mutual Fund crossed the Rs 5,000 crore mark in assets under management in July 2002. Gross revenues of HDFC Asset Management Company during the quarter ended June 30, 2002 increased to Rs 9.49 crore against Rs 4.74 crore in the corresponding quarter last year. Profit after tax amounted to Rs 2.30 crore against Rs 1.17 crore in the corresponding quarter last year. "The fund has declared a maiden 10 per cent dividend," Parekh said.