HDFC Q1 net profit up 17% to Rs 1,173 cr, shrs fall 4%

Moneycontrol Bureau

India's largest mortgage lender -  Housing Development Finance Corporation's (HDFC) first quarter (April-June) standalone net profit rose a little more than 17 percent year-on-year to Rs 1,173 crore, driven by robust individual loan growth. Net interest income (NII) or the difference between interest earned and paid out, increased at a similar pace to Rs 1,794 crore.

Must read: Post HDFC Q1: Shares fell, should investors worry?

At 14:40 hours HDFC shares fell nearly 4 percent to trade at Rs 807 on NSE. According to a CNBC TV18 poll estimate, the net profit and NII both were expected to grow by 20 percent each.

Also read: Sebi, NSE ban 26 entities from trading in two cases

During the quarter, HDFC could not earn profit on sale of investments, which was about Rs 20 crore in the corresponding quarter of the previous year. Investment gains stood at Rs 105 crore in January-March, FY13; while it was at Rs 316 crore for the full year. 

The abasence of investment profits actually eroded its profit margin, which fell short of market expectation.  

"As at June 30, 2013, the unrealised gains on HDFC's listed investments amounted to Rs 33,270 crores as against Rs 27,001 crore in the previous year. This excludes the appreciation in the value of unlisted investments," HDFC said in a release.

The housing finance company expanded its total loans by 19 percent to around Rs 1.77 lakh crore, which is on expected lines. Loans given to home buyers or individual loans grew by 31 percent after adding back loans sold. The book consists of home loans and builders' credit.

As a general practice, some of HDFC home loans are sourced through HDFC Bank, which retains a portion of such loans in its book. In banking parlence this is stated as HDFC sells loans to HDFC Bank. Exclusing this component HDFC's total loan growth was 24 percent.

The spread (on loans over the cost of borrowings) for the quarter was at 2.29 percent. It has been hovering in the broader range 2-3 percent for the last few quarters. Net interest margin (NIM) stood at 3.9 percent as against 4.2 percent in the previous quarter.

Gross non-performing loan (NPL) ratio stood at 0.77 percent of the credit book compared with 0.79 percent. According to HDFC, this is the thirty-fourth consecutive quarter at which the percentage of non-performing loans have been lower than the corresponding quarter in the previous year.

During the three-month period, the lender had to make a provision of Rs 1,326 crore as per norms mandated by the National Housing Bank, the regulator for housing finance companies. Out of that Rs 420 crore was on account of NPLs while the rest Rs 906 crore was made for standard performing loans and other provisions.

"The balance in the provision for contingencies account as at June 30, 2013 stood at Rs 1,801 crore. This is equivalent to 1.02 percent of the portfolio. Thus the Corporation carries an additional provision of  Rs 475 crore over the regulatory requirements," HDFC said in a release.

The consolidated net profit shot up 34 percent to Rs 1,707 crore for the quarter ended June 30, 2013.

HDFC shares on Friday closed at Rs 803, down 3 percent from its previous closing price.

saikat.das@network18online.com