HDFC - Loan Assignments Higher; LCR Requirement Will Lead To A Minor Negative Carry: Motilal Oswal
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Motilal Oswal Report
Takeaways from Housing Development Finance Corporation Ltd.’s pre-quarterly release -
HDFC sold down loans worth Rs 74.7 billion in Q3 FY22 versus Rs 70.8 billion YoY and Rs 71.3 billion QoQ. We expect HDFC to report an upfront assignment income of Rs 3.8-4 billion from the sell-down. Important to note that HDFC has sold ~Rs 200 billion worth of loans in nine months-FY22 versus ~Rs 115 billion in nine months-FY21.
Profit from the sale of investments was zero. In Q3 FY21, it had reported a profit from the sale of investments of Rs 1.57 billion. This was from a part stake sale in HDFC Life Insurance Company Ltd. to pare down its stake to 49.99% and to comply with Reserve Bank of India guidelines.
Under India-Accounting Standard guidelines, employee stock options are fairly valued and charged to the profit and loss under employee expenses over a two-year vesting period.
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