HDFC Ltd's Q3 net up 11% YoY to Rs 3,261 cr, beats street estimates

Higher income and lower-than-expected credit loss cited for better show; NII up 7% to Rs 4,284 crore

Mortgage lender Housing Development Finance Corporation (HDFC Ltd) has reported an 11 per cent jump in net profit to Rs 3,261 crore in the October–December period of FY22, beating street estimates. Net profit was aided by higher income and lower-than-expected credit loss. Analysts at Bloomberg had estimated a net profit of Rs 3,099 crore in the current quarter.

Net interest income (NII) of the mortgage lender increased by 7 per cent to Rs 4,283.8 crore in Q3FY22 compared to Rs 4,004.74 crore in the year-ago period and net interest margin, a measure of profitability, stood at 3.6 per cent.

Asset quality inched up because the lender recognised some loans as non-performing, which were overdue for less than 90 days. The gross non-performing loans (NPLs) of the lender stood at 2.32 per cent, up 32 basis points sequentially.

Out of the total reported gross NPLs of Rs 12,419 crore, Rs 2,746 crore comprises loans which are less than 90 days past due as of December 31, 2021. Hence, as against the reported NPLs, the NPLs net of loans that are less than 90 days past due as at December 31, 2021 is 1.81 per cent, with individual NPLs at 1.14 per cent and non-individual at 3.87 per cent.

The lender is carrying provisions to the tune of Rs 13,195 crore at the end of December quarter as against the regulatory requirement of Rs 7,450 crore. For the quarter, the expected credit loss was to the tune of Rs 393 crore, down 34 per cent from the year-ago period. While there has been an increase in the reported NPLs, there has been no financial impact and credit costs have reduced, the lender said.

Under the Reserve Bank of India’s Covid restructuring scheme, loans restructured is equivalent to 1.34 per cent of the loan book. Of the total loans restructured, 64 per cent are individual loans and 36 per cent are non-individual loans. Further, of the loans restructured, 34 per cent is in respect of just one account and in January 2022, recovery has been made in respect of this account and post the recovery, the restructured book of the lender stands at 1.21 per cent of the loan book, the management said.

Meanwhile, as far as lending is concerned, in December 2021, the mortgage lender recorded its second highest monthly individual disbursements. “The demand for home loans and pipeline of loan applications continues to remain strong. Growth in home loans was seen in both, the affordable housing segment as well as in high end properties. The increasing sales momentum and new project launched augurs well for the housing sector”, the management said.

At the end of December quarter, the assets under management (AUM) of the lender grew 12 per cent to Rs 6.19 trillion compared to Rs 5.52 trillion in the year-ago period. Individual loans comprised 79 per cent of the AUM and saw growth of 16 per cent year-on-year.

Shares of the lender closed 1.87 per cent higher at Rs 2,612 on the BSE.