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Tuesday, October 22, 2013

Robust loan growth lifts HDFC net 10% in Q2

Housing Development Finance Corporation (HDFC) reported a 10 per cent increase in net profit at Rs 1,266 crore in the July-September quarter on the back of robust growth in individual loans.

In the year-ago period, India’s largest standalone housing finance company reported a net profit of Rs 1,151 crore.

In the reporting period, HDFC’s income from operations rose 13 per cent to Rs 5,859 crore (Rs 5,175 crore in the year-ago period) while the profit on sale of investment was down 8 per cent at Rs 87 crore (Rs 94 crore).

“The loan book in the individual segment grew by 29 per cent, while the non-individual segment (includes loans given to corporates and developers) grew at 8 per cent. Both segments combined grew by 22 per cent,” said Keki Mistry, Vice-Chairman and Chief Executive Officer of HDFC.

“Our lending is more to middle-income and salaried people, more on the outskirts of big cities, and in smaller cities where the growth is still reasonably good. We don’t see a big reduction in the housing prices in the near future,” Mistry said.

Residential focus

HDFC’s focus largely has been on the residential segment in the past 18 months, he observed. India’s growing middle-class population, he said, has been driving the demand for homes, while the demand for luxury homes and commercial segments has been slow.

HDFC’s average loan size remains at Rs 21.90 lakh in the residential segment. We expect 18-20 per cent growth rate going forward,” said the HDFC chief. A break-up of the expenditure shows that interest and other charges increased by 13 per cent at Rs 4,046 crore (Rs 3,541 crore) and other expenses rose by 19 per cent at Rs 95 crore (Rs 80 crore).

However, provision for contingencies (which is a part of expenditure) was sharply lower at Rs 15 crore (Rs 40 crore) as the National Housing Bank reduced the provisioning for standard loans for ‘commercial real estate-residential housing’.

Year-on-year, HDFC’s loan book increased 19 per cent to Rs 1,84,886 crore (as at September-end 2013) against Rs 1,55,128 crore (as at September-end 2012).

HDFC witnessed a marginal increase in gross NPA ratio at 0.79 per cent as against the year ago’s 0.77 per cent.

Mistry said a good part of increase is attributable to a single account, the Rs 460-crore exposure to realty company Hirco’s two projects near Mumbai and Chennai which have gone bad.

Calling it a “technical default”, he said there is an adequate security against the exposure and the cost of the land parcel alone is over Rs 2,000 crore. HDFC will enforce provisions of the Sarfesi Act and auction the securities, he said, hinting that realty firm Hiranandani Constructions is likely to take over the project.

Independent directors

Meanwhile, the company informed BSE that Keshub Mahindra, Vice-Chairman, and Shirish B. Patel, Independent Director of the corporation, have resigned as directors with immediate effect.

Both Mahindra and Patel were directors of the corporation since its inception. They were also members of the Nomination and Compensation Committee of Directors of the Corporation.

Shares of HDFC ended marginally higher by 0.23 per cent at Rs 820.45 a share on the Bombay Stock Exchange.

Source: thehindubusinessline


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