HDFC gains after individual loan disbursements rise 26% in Q3FY21

Housing Development Finance Corporation (HDFC) rose 1.07% to Rs 2,607 after the company said its individual loan business continued to see improvements during the quarter ended 31 December 2020.

Disbursement growth over the corresponding quarter of the previous year was 26%. For the nine months ended 31 December 2020, individual loan disbursements stood at 86% of the levels in the corresponding period of the previous year.

The corporation assigned loans to HDFC Bank amounting to Rs 7,076 crore compared to Rs 4,258 crore in the corresponding quarter of the previous year. Individual loans sold in the preceding 12 months amounted to Rs 16,956 crore as against Rs 21,066 crore in the previous year.

Gross income from dividend in Q3 December 2020 was Rs 2 crore compared with Rs 4 crore in the same period last year.

During Q3 December 2020, the profit on sale of investments was Rs 157 crore. This was on account of the sale of 25,48,750 equity shares of HDFC Life Insurance Company (HDFC Life). The corporation's shareholding in HDFC Life now stands at 49.99%. This has met the RBI's mandate of reducing the corporation's shareholding in HDFC Life to 50% or below by 16 December 2020. For the purpose of consolidated financial results under IndAS, however, HDFC Life shall continue to be accounted as a subsidiary.

The profit numbers for Q3 December 2020 will not be comparable with that of the corresponding quarter of the previous year. The merger of GRUH Finance with Bandhan Bank was effective 17 October 2019. As per IndAS, the corporation had on derecognition of the investment in GRUH, recorded a fair value gain of Rs 9,020 crore through the statement of profit and loss during the quarter ended 31 December 2019.

Under Indian Accounting Standards (IndAS), the employee stock options are required to be fair valued and charged to the statement of profit and loss as a part of employee benefit expenses primarily over the two year vesting period. This would result in a charge to the statement of profit and loss of approximately Rs 147 crore during the quarter ended 31 December 2020.

The housing finance major's net profit declined 53.2% to Rs 5,035.41 crore in Q2 September 2020 from Rs 10,748.69 crore in Q2 September 2019. Total income stood at Rs 35,732.88 crore in Q2 FY21, rising 4.9% from Rs 34,051.89 crore in Q2 FY20.

HDFC is engaged in financing by way of loans for the purchase or construction of residential houses, commercial real estate and certain other purposes, in India.

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