Mortgage lender Housing Development Finance Corporation (HDFC) reported a pre-tax profit of Rs 3,607 crore in the first quarter of FY21, against Rs 3,985 crore in the same period a year ago, down 9.5 per cent due to additional provisioning for pandemic-related uncertainties and a negative carry on account of higher liquidity.
There is, however, incongruity in the numbers because the pre-tax profit of the lender last year was bulked up by stake sale in its life insurance subsidiary, dividend income, and net gains from de-recognising assigned loans. After adjustment, pre-tax profit at the end of the June quarter stood at Rs 3,265 crore, against Rs 2,684 crore, up 22 per cent.
The net profit was down 4.73 per cent to Rs 3,051.52 crore against Rs 3,203.10 crore in the same period a year ago.
It earned a net interest income (NII) of Rs 3,392 crore in Q1 (Rs 3,079 crore last year in the same quarter), but taking into account the high liquidity level and equity investment, NII stood at Rs 3,609 crore, up 17 per cent YoY. The net interest margin for the quarter stood at 3.1 per cent, down 2 bps. However, after adjusting for the negative carry, it stood at 3.3 per cent, the same as in the previous year.
The lender took additional provisions of Rs 404 crore due to the pandemic in the reporting quarter and provisions for standard assets stood at Rs 1,199 crore.
“We are done with high levels of provisioning, and do not need to make further provisioning for the pandemic. The balance sheet is protected against Covid-related defaults,” said Keki Mistry, vice-chairman and chief executive officer, HDFC.
Gross NPA dropped 12 bps to 1.87 per cent. NPAs in the individual loan portfolio stood at 0.92 per cent, down 3 bps from 0.95 per cent in March 2020. In the non-individual portfolio, NPAs were down 61 bps to 4.10 per cent. “During periods of distress, NPAs do tend to move up but once the economy gets back to some level of normalcy, they tend to come back to levels that used to prevail. In the current circumstances, I do not see too much of an increase in the level of NPAs but we need to be cautious,” Mistry said.
It has 16.6 per cent of its individual loan portfolio and 22.4 per cent of the corporate book under the moratorium as of now.
Assets under management grew 12 per cent to Rs 5.31 trillion at the end of the June quarter from Rs 4.75 trillion, with 11 per cent growth in the individual book and 12 per cent in the non-individual book. Due to the lockdown, lending was hampered but it has improved since April. “The significant change during the quarter has been the shift to digital sourcing of business through various channel partners. As of date, 80 per cent of business has migrated to digital sourcing,” the lender said.
Deposits grew 26 per cent YoY to Rs 1.43 trillion. Its CAR stood at 17.3 per cent, of which Tier 1 capital was 16.2 per cent.
Addressing the 43rd AGM, Deepak Parekh, chairman, HDFC, allayed fears that demand for commercial real estate would diminish with more people opting to work from home. He said many large companies had acquired or leased commercial properties, particularly in Bengaluru and Hyderabad, during the period.