HDFC Profit Meets Estimates On Strong Loan Growth
HDFC’s Q2 net profit rises 15 percent to Rs 2,101 crore.
Housing Development Finance Corporation Ltd.’s quarterly profit met analyst estimates on a strong loan growth.
Net interest income rose 13.6 percent year-on-year to Rs 2,612 crore for the September-ended quarter, India’s largest mortgage lender said in an exchange filing. That was higher than the Rs 2,464 crore estimated by analysts tracked by Bloomberg.
The better-than-expected performance was supported by an 18 percent growth in the lender's loan book. Individual loans accounted for 70 percent of all advances in the first half of the financial year ending March, Keki Mistry, vice-chairman and chief executive office of HDFC, said in a press conference
Net profit rose 15 percent to Rs 2,100 crore, also higher than the Rs 1,990 crore forecast, helped by a larger loan book and a stable net interest margin at 3.9 percent. The management expects the margin to remain stable in the coming quarters, Mistry said.
Asset quality remained largely unchanged with gross non-performing loans ratio at 1.14 percent compared to the previous three months. Bad loans from individual accounts were at 0.65 percent of total advances and 2.18 percent for corporate borrowers, according to Mistry.
Provisions for bad loans during the quarter stood at Rs 95 crore compared to Rs 85 crore in the previous three months.
HDFC’s shares erased early losses to rise as much as 1.2 percent to Rs 1,718 after the earnings announcement. That compares with a 0.5 percent gain in the benchmark NSE Nifty 50 Index.
Life Insurance Subsidiary IPO
The mortgage lender will list its subsidiary HDFC Standard Life Insurance Co. by selling 9.6 percent stake at a price band of Rs 270-290 per share. Another 5.4 percent will be offloaded by HDFC’s joint venture partner Standard Life Plc.
At a price-to-book ratio of 13.2, HDFC Life’s IPO is valued higher than its already listed insurance peers ICICI Prudential Life Insurance Company and SBI Life Insurance.
The company met potential investors around the world who gave its life insurance subsidiary a higher valuation, said Deepak Parekh, chairman of HDFC Ltd. The return on equity and new business margins for HDFC Life are all better than the others, he added.
We have a good management team, we have a good brand. The two initial promoters have good reputation and we feel that it’s a fair price.Deepak Parekh, Chairman, HDFC
Parekh also said that the insurance industry will soon see smaller players being acquired by the larger ones.
There will be consolidation as there are far too many companies in the space. Some of them are only adding Rs 100-200 crore premiums a year. They cannot survive.Deepak Parekh, Chairman, HDFC