HDFC’s Third Quarter Profit Meets Estimates, Provisions Jump 72%

Housing Development Finance Corporation Ltd.’s net profit grew 11.9 percent in the October to December quarter, despite a 72 percent increase in provisions.

Net profit rose to Rs 1,701.21 crore compared to Rs 1,520.5 crore in the corresponding quarter last year, the non-banking finance company said in its filing to the exchanges. While the net profit came in marginally higher than the Rs 1,675 crore consensus estimate of analysts tracked by Bloomberg, it’s still the lowest absolute profit in four quarters.

Total income rose 12 percent to Rs 8,137.2 crore compared to Rs 7,268.4 crore. Net interest income rose 17.2 percent year-on-year t Rs 2,769.86 crore.

Asset Quality Performance

Provisions increased 72.1 percent to Rs 117 crore from Rs 68 crore last year. On a sequential basis, provisions increased 23.2 percent.

Gross non-performing assets rose to 0.81 percent of the loan portfolio versus 0.76 percent in the July to September quarter.

The non-performing loans of the individual portfolio stood at 0.65 percent while that of the non-individual portfolio stood at 1.16 percent, both seeing a 4 basis point increase over the July to September quarter .

The company did not make use of RBI’s special dispensation on classification of bad loans.

Other Highlights

• Net interest margins stood at 4.14 percent as compared to 3.9 percent in the year-ago quarter, mainly on account of a reduction in incremental funding by 22 basis point during the quarter.
• Spread on loans rose to 2.46 percent.
• Total loan book stood at Rs 2,86,876 crore, rising 16 percent over the corresponding quarter last year, and in line with recent trends for the company.
• The individual loan book rose 15 percent, a marginal dip from the 16-17 percent trend over the last four quarters.

The dip in disbursements is largely because buyers are delaying purchases in anticipation of a fall in real estate prices triggered by the government’s demonetisation decision, Keki Mistry, the vice chairman and chief executive officer of HDFC said at the press conference in Mumbai. The situation should normalise over the course of the next two months, Mistry added.