HDFC Q3 net profit rises 13% to Rs 3,691 crore, impairments decline

Monetary policy, interest rate actions had short-term impact on net interest income, says mortgage major

The standalone net profit of mortgage major Housing Development Finance Corporation (HDFC) rose 13 per cent year-on-year (YoY) to Rs 3,691 crore for the quarter ended December 2022 (Q3FY23).

It had posted a net profit of Rs 3,261 crore in the same quarter a year ago.

The HDFC stock closed 1.85 per cent lower at Rs 2,612 crore on the BSE.

Vice-Chairman and Chief Executive Officer Keki Mistry said profit growth had been restricted due to rate hikes by the RBI, adding that while the company's liabilities got repriced faster, it took a while for the assets to reflect the newer rates.

He said the company was yet to receive any communication from the Reserve Bank of India (RBI) on its application for multiple regulatory leeways to continue after the merger. He said the transmission lag between asset and liability repricing was generally one quarter, and the company would start reporting better growth numbers thereafter.NII for the quarter expanded 13 per cent YoY to Rs 4,840 crore as against Rs 4,284 crore in Q3FY22.

The impairment on financial instruments declined to Rs 370 crore from Rs 393 crore a year ago, it said.

Assets under management (AUMs) rose 13.3 per cent (YoY) to more than Rs 7 trillion as of December 31, 2022, up from Rs 6.1 trillion at the end of December 2021.

Individual loans comprise 82 per cent of the AUMs.

AUM-wise growth in the individual loan book was 18 per cent.

The inherent demand for home loans remains good. Their growth was seen in both the mid-income segment as well as high-end properties, HDFC said in a statement.

During the nine months ended December 31, 2022, the average size of individual loans stood at Rs 35 lakh as against Rs 33 lakh in FY22.

During Q3FY23, HDFC assigned housing loans amounting to Rs 8,892 crore, up from Rs 7,468 crore in Q3FY22, to HDFC Bank.

Referring to the asset-quality profile, it said collection efficiency for individual loans on a cumulative basis stood at 99 per cent during the nine months ended December 31, 2022. On the basis of the revised norms of the RBI (November 2021), there has been a significant improvement in non-performing loans (NPLs). Its gross individual NPLs declined to 0.86 per cent in December 2022 from 1.44 per cent in December 2021.

Gross non-individual NPLs also declined to 3.89 per cent from 5.04 per cent.

HDFC’s capital adequacy ratio stood at 23.7 per cent. Of that Tier I capital was 23.2 per cent and Tier II capital was 0.5 per cent. 

According to regulatory norms, the minimum requirements for the capital adequacy ratio and Tier I capital are 15 per cent and 10 per cent respectively.