HDFC net profit dips to Rs 2,870 cr in Q2, net interest income rises 21%

The Assets Under Management (AUM) rose 10.2 per cent to Rs 5,40,270 crore in Q2FY20 from Rs 4,90,072 crore in the previous year

Housing Development Finance Corporation’s (HDFC’s) net profit dipped 27.6 per cent to Rs 2,870 crore in second quarter of financial year 2020-21 (Q2FY21) from Rs 3,962 crore in the corresponding period a year ago.

Keki Mistry, vice-chairman and chief executive officer, said the numbers for Q2FY21 were not directly comparable with the previous year because it had huge income from dividend and sale of investments in Q2FY20.

After adjusting for sale of investments and fair value, the profit before tax would be Rs 3,366 crore in Q2FY21, as against Rs 2,646 crore a year ago, reflecting a growth of 27 per cent.

The mortgage lender’s stock closed 6.24 per cent higher at Rs 2,042.65 per share on the BSE Sensex as the net profit in Q2FY21 was higher than market estimates of Rs 2,312 crore, according to Bloomberg data.

The net interest income (NII) rose 21 per cent in Q2 to Rs 3,647 crore from Rs 3,021 crore the previous year.

The assets under management (AUM) grew 10.2 per cent to Rs 5.40 trillion in Q2FY20 from Rs 4.90 trillion a year ago. Individual loans comprise 75 per cent of AUM. On an AUM basis, the growth in the individual loan book was nine per cent. The growth in the non-individual loan book was 13 per cent.

Individual loan application receipts grew 12 per cent and approvals grew by nine per cent year-on-year (YoY) in Q2FY21. Individual disbursements during the quarter were at 95 per cent of the previous year.

The overall collection efficiency for individual loans in September (the first month after the moratorium) was 96.3 per cent. The collection efficiency for non-moratorium customers stood at 99.5 per cent, Mistry said.

Traction in individual loans gained momentum, seeing successive month-on-month improvements after the unlocking of the economy. The prevailing low interest rates, softer property prices, reduction in stamp duty in some states and strong demand for home loans bodes well for the housing finance sector, Mistry said.

The gross non-performing loans stood at Rs 8,511 crore — or 1.81 per cent of the loan portfolio. The non-performing loans in the individual portfolio stood at 0.84 per cent, while it stood at 4.19 per cent in the non-individual portfolio. The quarter saw resolutions in certain non-individual loans.

HDFC is required to carry a total provision of Rs 5,621 crore, according to regulatory norms. However, actual provisions stood at Rs 12,304 crore. The capital adequacy ratio stood at 20.7 per cent, with tier-I capital at 19.5 per cent in September.