NIM marginally down but will make up in 3-6 mths: Dewan Hsg

Dewan Housing has posted Q2 net profit at Rs 72 crore against Rs 58 crore year-on-year. Their gross non-performing asset (NPAs) stand at 0.97% against a 1.07% earlier while net NPAs are at 0.26% versus the previous 0.44%. 

Prashant Chaturvedi, head-financial resources, Dewan Housing, joins CNBC-TV18 to take us through the numbers and explain the way forward for the company. 

With regard to the cancellation of penalties on loans that are pre-paid, he says that the hit will be minimal, 'somewhere around Rs 5-6 crore,' he says. 

Below is the edited transcript. Also watch the accompanying video. 

Q: Can you take us through the numbers?

A: We have made a total disbursement in the first half of the financial year to the tune of Rs 3700 crore, which is representing a growth of 25.44%. We have posted in the first half, 42.45% growth in net interest income, where we have given a net interest income of Rs 216.71 crore as against Rs 152.13 crore earlier. 

Q: Can you tell us what you did by way of net interest income in the last three months as well as what you did by way of profit in the last three months?

A: In September, we have posted a total Rs 111.36 crore of net interest income as against Rs 81.11 crore in the corresponding quarter which is 37.30% growth. In the last three months, we have posted a disbursement growth of 28.06% which was 22.5% in the first quarter of June 2011. 

Q: Profits for the July-September quarter?

A: July-September, the profit is Rs 71.89 crore as against Rs 58.04 crore which is showing a total growth of 23.86%. 

Q: What about the NIMs and spreads, 2.85% in Q1, had seen a slight contraction. Has it remained stable there?

A: NIM has come down slightly from 2.84%, now in Q2, it is 2.77%. For the first half (H1), it is 2.79%. So we have seen some kind of reduction of six-seven basis points in the net interest margin, and that is basically on account of the lag in passing on the interest cost to our customers which we believe is temporary in nature. We will just make it over a period of next three-six months.

Q: Can you give us an idea of how you all did by way of bad loans?

A: We have posted a total gross NPL number of 0.97% which was 1.07% in the corresponding quarter and the net NPA is 0.26%.

Q: Late last night, the National Housing Bank said that you guys cannot charge penalties if a loan is prepaid. How much do you all make by way of these penalties?

A: It is premature to comment anything on that because there is some kind of clarity what we need from our regulator because it has come just yesterday. Last year, we made some Rs 9 crore out of pre-payment penalty which is less than 0.5% of my topline. So this year, if we have to forego Rs 5-6 crore on account of that, that will be a very minimal hit on the profit and loss.

Q: What the clarity you are seeking from the regulator?

A: The industry has been disbursing most of the loans on the variable-rate basis. So are we saying that on our borrowing side also where all bankers including NHB are charging 1-2% prepayment charges, are they talking to waive those prepayment charges also, and how do we implement these pre-payment charges in the practical sense. We need a clarification on that.

Q: On the uniform rate for the new and the old customer, how much will that adjustment cost you? What's your sense, is the industry going to upward revise the old customers or downward revise the new customers?

A: That is also not clear because when we talk about similarity in the rates, it is very difficult. What they have mentioned in the circular is that you can charge maybe a differential rate for a different set of customers, for example, for salaried customers, there can be of different rates and for wage class customers, there can be another rate. But for same class and grade of customers, you cannot differentiate in the rate of interest. So we need to take a clarification on that too.