India's largest housing finance company, Housing Development Finance Corporation (HDFC) on Monday reported more than 16% year-on-year jump in its third quarter (October-December, 2012-13) net profit at Rs 3,293 crore, driven by robust loan growth.
India's largest housing finance company, Housing Development Finance Corporation ( HDFC ) on Monday reported more than 16% year-on-year jump in its third quarter (October-December, 2012-13) net profit at Rs 3,293 crore, driven by robust loan growth.
During the quarter, the lender expanded its loan book by nearly 22% y-o-y to Rs 1.61 lakh crore. The HFC keeps selling its loan portfolios to other lenders. In the last 12 months it sold Rs 5,264 crore individuals loans. Consequently, the total loan growth comes around 25% if sold loans are added.
"We have never seen any decline in home loan growth," Keki Mistry, CEO, HDFC told moneycontrol.com.
"In between April 01 and December 31, our individual loans (retail home loans) spurted 85% while the non-individual loans rose only 15%. Our home loan customers are neither investors nor speculators. They buy homes out of sheer need to live in. Any change in interest rates does not influence their home purchasing plans," he said.
The spread or the difference between loan yields and cost of borrowings, rose to 2.27%, little changed from the July-September quarter. For nine months ended December 31, it too remained unchaged at 2.28%. Net interest margin (NIM) or the difference between interest earned and paid out, stood at 4.10% as against 4.20% as on September 30, 2012.
"HDFC continues to service the loans sold under these (securitised) transactions and is entitled to the residual interest on the loans sold. The residual interest on the individual loans sold is 1.37% p.a. and is accounted over the life of the loans. As on December 31, 2012; the total loans outstanding in respect of loans sold stood at Rs 16,049 crore," HDFC said in a release.
The gross non-performing loan ratio improved marginally to 0.75% compared with 0.79% a quarter back. The non-individual portfolio (loans given to builders and corporates) bore the majority share of bad loans with 0.91% as against 0.62% from the home loans. Capital adequecy ratio was at 17.5% as on December 31, 2012.
"Our composition of loan book would continue in the present form wherein individual loans account for 68%," Mistry pointed out.
The company recorded a sharp appreciation in its investment portfolio, which escalated to about Rs 34,100 crore as against Rs 19,100 crore a year back. All investments, according to the CEO, are shown at their historical price in conformity with the accounting practice. When those are compared with the current price, one can see a surge in valuations.
The consolidated net profit (inclusive of its subsidiaries), increased 24% to Rs 4,560 crore for the nine-months ended December 31, 2012. HDFC Life Insurance clocked the highest net profit but on a lower base. It rose from Rs 10 crore to Rs 127 crore y-o-y. HDFC Mutual Fund net profit rose 20% y-o-y to Rs 114 crore.
HDFC shares fell nearly 2% on Monday to close the day's trading at Rs 812.50. In the last one year, the scrip rose 20%.
"The numbers were on line with expectation. However, HDFC traditionally has been a market outperformer. Accordingly, investors had expected higher than expected earnings. Hence, the stock was down," said Arun Kejriwal, founder of KRISH, a Mumbai-based brokerage firm.
Overall assets quality remained intact and HDFC continued to maintain higher provision level compared to mandatory required. Overall capital adequacy ratio stood at 17.5% with Tier I at 14.9% indicating sufficient capital available for growth without any dilution, suggested a report by Motilal Oswal maintaining 'buy' call on the stock.
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