HDFC rides small-town housing boom

Housing Development Finance Corporation (HDFC), India’s largest mortgage lender, posted a 12 per cent increase in its October-December net profit, helped by strong demand for home loans from non-metros.

HDFC posted a net profit of ?1,278 crore against ?1,140 crore in the year-ago period.

Total income increased 15 per cent to ?6,020 crore while the loan book grew 19 per cent to ?1,92,266 crore.

Mumbai-based HDFC caters mainly to the mid-income home buyer. Its average loan size is ?22 lakh. Apart from lending to the retail segment, HDFC also disburses credit to real estate developers.

But it was the retail segment that contributed 89 per cent of the additional loans in the first nine months of 2013-14. The retail loan book grew 24 per cent to ?1,30,916 crore during the December quarter.

Keki Mistry, Vice-Chairman and CEO of HDFC, said: “The company has seen good demand for loans from individuals across all major cities. In percentage terms, growth has come from tier-II and tier-III towns.” The outskirts of Delhi NCR, Chennai, Mumbai, Bangalore and Pune primarily contributed to HDFC’s loan growth during the quarter.

There has been no behavioural change in consumers buying homes across the country, Mistry said. The average age of customers buying homes is 38 years and the loan amount they borrow is generally 65 per cent of the value of the house.

While non-performing assets (NPAs) have been an issue for most finance companies, HDFC continued to maintain good asset quality with gross NPAs at 0.77 per cent of total loans at the end of December 2013. A focus on first-time home buyers, who seldom skip instalments, has helped HDFC keep delinquencies low.

Meanwhile, bank and finance stocks took a hard knock in Wednesday’s trade on fears that the RBI may not cut rates in its policy review on January 28 after the Urjit Patel Committee’s recommendations.

“I don’t think the RBI will cut rates in the January or March policy as the US Fed tapering will weigh on its calculations,” he added. This could mean that HDFC will not lower rates.


satyanarayan.iyer@thehindu.co.in

Source: Thehindubusinessline

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RBI unlikely to tinker with rates in Jan 28 policy review: BNP Paribas

BNP Paribas expects the Reserve Bank of India to keep policy rates unchanged in the January 28 policy review meeting.

The RBI is likely to pause for the second time in a row, thanks to inflation based on both the wholesale price index (WPI) and the consumer price index (CPI) softening in December.

But there is a strong chance of the central bank going in for 25 basis point hike in each of the subsequent two meetings, said Richard Iley, Chief Asia economist, BNP Paribas.

BNP Paribas expects interest rates to remain elevated for the next two quarters. The interest rates are expected to come down by the end of 2014.

“Inflation is worrisome. CPI is extremely high. Regaining control over inflation is going to be tough for RBI Governor Rajan,” Iley told Business Line.

Richard also felt that the RBI will have to factor in the aspect of a limbo situation on the fiscal policy front given the impending general elections.

India’s inflation remains uncomfortably sticky at about 8 per cent, despite the economy’s lacklustre growth.

Survey evidence suggests that inflation expectations — both of urban households and professional forecasters — remain on an upward arc, risking a continued ratcheting up of average inflation performance, noted a recent BNP Paribas report on Key Macro Themes for 2014 in Asia ex Japan.

GDP growth

BNP Paribas sees Indian economy growing at a dismal 4.3 per cent in 2013-14. But it has projected a stronger GDP growth of 5.1 per cent in 2014-15.

However, a return to 7-8 per cent GDP growth looks a “pipedream” for the foreseeable future.

“Achieving 7-8 per cent GDP growth is long way. We are sub 5 per cent in the latest quarter. It’s very hard to generate additional 2 percentage points growth. The concern is poor performance of the industrial sector,” Iley said.

There has been stagnation in industrial output in the best part of the last four years, he said, adding that the key is going to be recovery of the corporate sector. “It’s hard to see animal spirits returning. The role of dysfunctional politics has been unhelpful.”

The outcome of general elections in May 2014 would have a significant impact on sentiments. The positive outcome of a stable Government would pave the way for structural reforms and better economic growth, BNP Paribas said.

srivats.kr@thehindu.co.in

Source: Thehindubusinessline

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Kotak Bank Q3 net falls 6% as loan growth slows

Kotak Mahindra Bank saw its net profit drop 6 per cent to Rs 340 crore in the October-December quarter of this fiscal due to higher provisions and slower loan growth.

“We have cautiously slowed our commercial vehicle and commercial equipment (CVCE) segment due to stress in asset quality. Without considering CECV, our loan growth was at 12 per cent year-on-year,” said Dipak Gupta, Joint Managing Director of the bank.

CV segment hit

The mid-size private sector bank’s CV segment witnessed de-growth of 26 per cent. Gupta said the CV segment is seeing signs of stabilising, though there is no incremental business.

The retail and corporate books grew 6 per cent and 5 per cent, respectively. On the other hand, agriculture saw a healthy growth of 23 per cent.

‘Other income’ was marginally down at Rs 300 crore (Rs 305 crore).

Bad loans or gross non-performing assets (NPAs) worsened to 2.01 per cent of total loans as on December 31, 2013, from 1.46 per cent in December 31, 2012. The bank’s provisions (including towards bad loans) increased to Rs 70 crore as against Rs 42 crore in the corresponding quarter last year.

Also, it restructured assets worth Rs 42 crore (Rs 7 crore in Q3 FY13) during the quarter.


beena.parmar@thehindu.co.in

Source: Thehindubusinessline

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IDBI Bank joins the credit card bandwagon

Nearly nine years after becoming a full-fledged commercial bank, IDBI Bank has decided to issue credit cards to its customers.

The Mumbai-headquartered bank intends to issue around five lakh cards in three years — one lakh in the first year and two lakh cards each in the following two years.

The public sector bank, which currently has a base of more than 10 million customers, will be issuing EMV (Europay, MasterCard and Visa) chip cards with magnetic stripes.

EMV is a global security standard for microprocessor chip card technology. This ensures that the credit card is not only accepted anywhere in the world but is also better protected against fraudulent activities.

Since many merchant establishments in the country still have credit card payment infrastructure (terminals) that accept cards with magnetic stripe, the bank has decided to issue EMV cards with magnetic stripe.

The category of credit cards that the bank plans to issue are: Platinum, Signature and Corporate.

Service provider

For foraying into the credit cards space, IDBI Bank is planning to engage the services of a third party service (TPS) provider for providing end-to-end solutions for credit card issuance under the outsourced model. The TPS provider, among others, will undertake operational activities relating to account updation, demographic changes, payment instructions, recurrent payment instructions and balance transfer request received through physical change request form/phone banking/Net banking.

For now, IDBI Bank will be issuing credit cards on Visa and MasterCard platforms. The main business of Visa Inc and MasterCard Worldwide is to facilitate electronic funds transfer — they process payments between the banks of merchants and the card issuing banks of the purchasers.

Once Rupay (the home-grown rival of Visa and MasterCard) launches the credit card, the bank will issue the cards in association with Rupay too. Currently, IDBI Bank’s debit card portfolio comprises Rupay debit cards also.

As on November-end 2013, there were 18.77 million credit cards outstanding in the country. The total value of loans outstanding against these cards stood at Rs 12,789 crore.

ramkumar.k@thehindu.co.in

Source: Thehindubusinessline

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RBI’s Anand Sinha demits office

With Anand Sinha relinquishing his charge as Deputy Governor on Monday, the Reserve Bank of India has re-allocated his portfolios among the remaining three Deputy Governors — K.C. Chakrabarty, H.R. Khan and Urjit Patel. Sinha was in-charge of eight departments, including Departments of Banking Operations and Development, Risk Management, Information Technology and Expenditure and Budgetary Control.

Sinha was on an 11-month extension as he was dealing with the process of issue of new bank licences in the private sector. In the race for this top-level vacancy at the RBI are Executive Directors: B. Mahapatra, R. Gandhi, P. Vijaya Bhaskar, G. Gopalakrishna and Deepali Pant-Joshi.

Source: Thehindubusinessline

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