Target 2.2% net interest margin in FY10: HDFC

Housing finance major HDFC came in with results in line with market expectation––its profits surged a healthy 20% to Rs 565 crore against the Rs 468 crore clocked previously. 

Its net interest margins, however, were muted in comparison rising just 11% to Rs 830 crore.

The company’s Vice Chairman and Managing Director, Keki Mistry defended the sluggish net interest income (NII) growth saying that the numbers were pulled down by an exceptional dividend income. He said, “Actually if you look at our spreads, they are in the range we have always talked about. We have talked about spreads in the range of 2.15–2.50%. Actual spreads are 2.19%. The reason you feel the NII number are low is because of dividend income.”

While Deepak Parekh, Chairman, HDFC, in a press address, said, the average size of the individual loans has increased and is presently at Rs 15.4 lakh per loan.

Here are the excerpts from Deepak Parekh’s press address. Watch the complete video for the full speech.

In spite of the overall economic slowdown and uncertainty, the average size of the individual loans has increased and is presently at Rs 15.4 lakh per loan.

The gross non-performing loans, defined as loans and instalments that are outstanding for more than 90 days, as at March 31, 2009 stood at Rs 701.5 crore. This is equivalent to 0.81% of the loan portfolio as compared to 0.84% of the loan portfolio during the previous year. So, there is a marginal improvement in the non-performing loans’ position.

As per the prudential norms prescribed by the National Housing Bank (NHB), HDFC is required to carry a provision of Rs 319 crore in respect of our present non-performing assets and general provisions on the outstanding standard non-performing loans. So, the NHB requires us to make a provision of Rs 319 crore as of March 31, 2009. However, the provision for contingencies in our accounts as of March 31, 2009 stood at Rs 621.5 crore, which is equivalent to almost twice the number that is required under the regulating provisions. As at March 31, the Corporation’s capital adequacy ratio stood at 15.1% of the risk weighted assets as against the minimum requirement of 12%. Tier-I capital stood at 13.2% as against the minimum requirement of 6%.

For the year-ended March 31, 2009 the Corporation’s profit, before considering exceptional items and profit on sale of investments and other exceptional items and tax, stood at Rs 3,193.81 crore as compared to Rs 2,600 crore in the previous year. After providing Rs 934 crore for taxes, the net profit for the year-ended March 2009 increased by 23% to Rs 2,258.83 crore. The total profit before tax for the year-ended March 31 stood at Rs 3,219 crore. After providing Rs 936 crore for taxes, the profit stood at Rs 2,282 crore.