Expect spreads, NIMs to remain stable going ahead: HDFC

Second driver would be spreads. So if you look at spreads over the last several quarters, I would say several years spreads have generally remained stable within a band of 2 or 3 or 4 basis points up or down. For the 9-month period, spreads stood at 2.31 percent. If we were to look at spreads explicitly for second quarter then spreads were 2.30 percent and if you look at the first 6 months of the year spreads were 2.29 percent.

So from 2.29 they marginally moved up to 2.31 so spreads have remained stable and my sense is will continue to remain stable. On asset quality too, there are no signs of serious concern. Our gross non performing loan number in December stood at 0.69 percent which is exactly what it was in September of this year same 0.69 percent but it is a 8 basis point improvement over 0.77 percent which is were in December of last year. So, compared to December it is 8 basis point lower compared to September it is more or less the same, it is exactly the same.

Q: Both net interest margins and asset quality have remained largely stable with slight different margins. Can you share your outlook on both on the same?

A: Outlook could be spreads remain stable hopefully within a band of 2-3-4 basis points. Net interest margins should also broadly remain stable.

Q: Provisions have come in at about Rs 45 crore could you explain the increase both sequentially and over the last year?

A: If you look at the total amount of provisioning that we carry in the balance sheet a very large proportion of that provisioning is in respect of standard assets where there us no NPL, there us no sub standard asset but it is just that the regulators say that if we do a housing loan to an individual than 40 basis points of that loan amount has to be provided upfront in the profit & loss (P&L) account.