Housing Development Finance Corporation (HDFC) has reported a 10 per cent growth in net profit for the quarter ended December 31, to Rs 981 crore as compared to Rs 891 crore recorded during the same period of the previous year. The muted profit growth, which was below street’s expectation, is due to lower gains from sale on investment.
Profits from sale of investments fell to Rs 88 crore during the third quarter from Rs 167 crore in the corresponding period last year. "Last year we had sold our stake in IL&FS. But, sale of investments does not happen often," said Keki Mistry, vice-chairman and chief executive officer of HDFC.
The operating profit of the non-banking financial company grew to Rs 3650 crore from Rs 3087 crore which is an increase of 18.2 per cent which came on the back healthy loan growth of 21 per cent year-on-year to Rs 1.32 lakh crore till December.
The bank sold loans worth Rs 1,386 crore to HDFC Bank in the third quarter. " If the loans were not sold to HDFC Bank, the loan growth would have been 26 per cent," Mistry said.
Although, the home loan lender said that it did not see any slowdown in its loan growth, it has observed a slowdown in Mumbai region. " We are seeing some slowdown in Mumbai as far as demand for home loans is concerned despite an overall increase in loan approvals by 19 per cent over the past 9 months," Mistry said.
HDFC's total income also grew by 34.6 per cent to Rs 4,472.5 crore from Rs 3,321 crore. However, due to waiver of prepayment penalty the firm's income from pre-payment fines fell to Rs 13.5 crore in second- half of 2011 as against Rs 27 crore in first half of the year.
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The mortgage lender's asset quality improved despite the prevailing high interest rate regime as the gross non-performing asset ratio fell to 0.82 per cent from 0.85 per cent during the reporting period. "Home loans are long-term loans spanning over 10-15 years. Hence, the customer is bound to see 2-3 interest rate cycles," said Mistry. We do not think asset quality it is a matter of concern for us right now, said Mistry.
The spreads remained steady at 2. 27 per cent for the reporting period.
Mistry said the bank has made a provisioning of Rs 440 crore during the quarter for the dual rate home loans. According to regulations, banks and home loan financiers have to make 2 per cent provisioning for fixed cum floating home loan schemes as compared 0.4 per cent for other standard assets. However, HDFC said the higher provisioning will be reversed after March 31, 2013 as the loan will become a floating rate loan.