Signage for Housing Development Finance Corp. (HDFC) is displayed inside the bank’s branch in Mumbai, India. (Photographer: Vivek Prakash/Bloomberg)

Q4 Results: Strong Loan Growth Lifts HDFC’s Income, Profit 

Housing Development Finance Corporation Ltd.’s profit for the March quarter beat estimates, buoyed by strong loan growth.

Net profit for the three-month period rose 27 percent year-on-year to Rs 2,862 crore, according to its regulatory filing. That compares with the Rs 2,572-crore consensus estimate of analysts tracked by Bloomberg.

Net interest income jumped 19 percent to Rs 3,161 crore over last year, in line with the analysts’ forecast of Rs 3,029 crore. The mortgage lender restated last year’s number as per Ind-AS, a new accounting standard for reporting modeled by the Institute of Chartered Accountants of India.

HDFC was focused on selling individual loans this financial year, the housing financier’s Vice Chairman and Executive Chief Keki Mistry said at a press conference. The company had sold a significantly large number of loans in FY19, Mistry said.

“Our focus in the first quarter of this year continues to be largely on individual loans,” Mistry told BloombergQuint, noting that prioritising individual loans has been HDFC’s policy since its inception. Within individual loans, the focus would be on affordable housing, he said.

The lender said in a statement that its loan book improved by 15 percent in FY2018-19 over the previous fiscal. Mistry said that he doesn’t see any stress on the asset quality as far as the NBFC sector—which witnessed a liquidity crisis following payment defaults by the IL&FS group last year—is concerned. “Bulk of the problem on the liquidity side is over.”

Key Highlights (QoQ):

  • Gross non-performing assets fell from 1.22 percent to 1.18 percent.
  • Individual gross NPAs inched up to 0.7 percent from 0.68 percent.
  • Non-individual NPAs reduced to 2.34 percent from 2.46 percent.
  • Net interest margin contracted 20 basis points to 3.3 percent.
  • Provisions rose to a record Rs 935 crore in the quarter.

“There’s nothing to complain,” Sharekhan’s Deputy Vice President Lalitabh Shrivastawa said, adding that the mortgage lender has beaten street expectations on all major parameters, including growth, profitability and asset quality.

The housing finance company announced a dividend of Rs 21 per share (final Rs 17.50 + interim 3.50) for FY19.

Shares of the Mumbai-based company rose 1.7 percent to Rs 1,964.1 apiece immediately after the results were announced, compared with a largely unchanged Nifty 50 index.

Watch the interaction with Keki Mistry: