HDFC Q2 net profit tanks 28% YoY to Rs 2,870 crore, beats Street estimates

The numbers beat profit estimate, cheering investors. The stock soared to day's high of Rs 2,043 apiece on the BSE, up 6.2 per cent, as against 0.65 per cent rise in the benchmark S&P BSE Sensex

Housing financier HDFC’s net profit for September quarter of FY21 tumbled 27.5 per cent to Rs 2,870.12 crore, less than Street's expectations of over 50 per cent decline, supported by gain from stake sale HDFC  Life during the quarter. It had clocked a net profit of Rs 3,961.5 crore in the year-ago period.
 

On a consolidated basis, the profit declined 53.15 per cent to Rs 5,035.41 crore from Rs 10,748.69 crore clocked in Q2FY20. The lender has set aside provisions worth Rs 436 crore in the September quarter of FY21.
 

"The Corporation has sold 26 million equity shares of HDFC Life Insurance Company Limited (HDFC Life) resulting in a pre-tax gain of Rs 1,240.59 crore," the management said in a statement to the exchanges. 
 

The numbers beat profit estimate, cheering investors. The stock soared to day's high of Rs 2,065 apiece on the BSE, up 7.3 per cent, as against 0.65 per cent rise in the benchmark S&P BSE Sensex. The stock eventually settled 6 per cent higher at Rs 2,043 per share.
 

Analysts at ICICI Securities had expected the net profit to decline 54 per cent YoY to Rs 1,811.7 crore during the quarter.

"Despite elevated morat 2.0 print at 22 per cent, we anticipate less than 5 per cent restructuring. Factoring in home loan disbursements at 95 per cent of Q2FY20 (though conservative on non-individual side), we are building in asset under management (AUM) growth of 9-10 per cent. Also, we expect NIMs to be broadly steady QoQ," the brokerage had said in its preview report. READ ANALYSTS’ EXPECTATIONS HERE
 

Its pre-tax profit declined 22 per cent on a yearly-basis to Rs 3,531.78 crore. The same was Rs 4,530 crore in the September quarter of FY20. Sequentially, it slipped 2 per cent from Rs 3,606.83 crore.

Net interest income
 

For the recently concluded quarter, the net interest income (NII) came in at Rs 3,647 crore, jumping 20.7 per cent YoY from Rs 3,021 crore.Net interest margin (NIM) remained flat at 3.3 per cent. 
 

Analysts at Phillips Capital had expected HDFC’s NII to come in at Rs 3,311.2 crore for Q2FY21, up 12.2 per cent from Rs 2,950.4 crore clocked in Q2FY20, but down 0.7 per cent from Rs 3,335.6 crore reported in the June quarter of the current fiscal.

The lender reported a loss on investments worth Rs 61 lakhs, as against profit on investments worth Rs 1,627.09 crore in the year-ago quarter, and Rs 1,241.20 crore in Q1FY21.Overall, total income stood at Rs 11,732.7 crore, down 13 per cent from Rs 13,494.12 crore reported in Q2FY20.

Meanwhile, dividend income slipped 70 per cent YoY to Rs 323 crore during the quarter under review from Rs 1,073.8 crore reported in Q2FY20.

Assets under management

During the quarter ended September 30, 2020, individual loan application receipts grew 12 per cent and approvals grew by 9 per cent compared to the corresponding quarter of the previous year. Individual disbursements during the quarter were at 95 per cent levels of the previous year, the financier said in a statement.

"The months of September and October 2020 have seen the strongest recovery since the outbreak of the pandemic," it added.

As regards home loans, HDFC said 35 per cent of home loansapproved in volume terms and 18 per cent approved in value terms have been to customers from the Economically Weaker Section (EWS) and Low Income Groups (LIG). The average home loan to the EWS and LIG segment stood at Rs 10.7 lakh and Rs 18.2 lakh, respectively.

"Overall, the assets under management stood at Rs 5,40,270 crore as against Rs 4,90,072 crore in the previous year. Of this, individual loans comprised 75 per cent of the AUM," it said.

HDFC Q2FY21

Asset Quality

The overall collection efficiency for individual loans for the month of September 2020 (the first month after the moratorium) was 96.3 per cent, HDFC said. The collection efficiency for non-moratorium customers stood at 99.5 per cent.

That apart, the gross non-performing loans as at September 30, 2020 stood at Rs 8,511 crore, equivalent to 1.81 per cent of the loan portfolio. GNPA at the end of June quarter of FY21 was Rs 8,631 crore, which was equivalent to 1.87 per cent of the loan portfolio.

"If the Supreme Court order of maintaining the classification of accounts as status quo till further orders were not to be considered, the non-performing loans would have been only two basis points higher at 1.83 per cent of the loan portfolio; with individual NPLs at 0.88 per cent and non- individuals NPLs at 4.19 per cent," it said.

The non-performing loans of the individual portfolio stood at 0.84 per cent while that of the non-individual portfolio stood at 4.19 per cent. It set aside provisions worth Rs 436 crore in the September quarter of FY21.

Capital Adequacy

The Corporation’s capital adequacy ratio stood at 20.7 per cent, of which Tier I capital was 19.5 per cent and Tier II capital was 1.2 per cent. As per the regulatory norms, the minimum requirement for the capital adequacy ratio and Tier I capital is 14 per cent and 10 per cent respectively.