Housing Development and Finance Co (HDFC), the largest mortgage financier of the country, reported a 16 per cent rise in net profit (standalone) at Rs 1,140 crore for the December quarter, helped by healthy growth in net interest income. The profit was less than what the Street had expected, due to muted growth in trading profit.
Net interest income rose 25 per cent to Rs 1540 crore, on the back of 22 per cent growth in loans, mainly individual loans, which grew 25 per cent during the period.
“Loan growth continued to be very strong, primarily driven by individual loans. During the first nine months, 85 per cent of the disbursement was to individual borrowers,” Keki Mistry, vice-chairman and chief executive officer, told Business Standard. The trading profit was Rs 96 crore, compared with Rs 88 crore during the same period of the previous year.
| HDFC Quarter ended December (standalone) (Rs crore) | |||
| Dec ’11 | Dec ’12 | % change | |
| Operating income | 4,467.33 | 5,242.02 | 17.34 |
| Total income | 4,472.51 | 5,250.40 | 17.39 |
| Total expenses | 126.47 | 177.96 | 40.71 |
| Interest cost | 3,012.41 | 3,521.45 | 16.90 |
| Tax | 347.00 | 405.00 | 16.71 |
| Net profit | 981.25 | 1,140.10 | 16.19 |
| Source: Capitaline Compiled by BS Research Bureau | |||
Analysts expected trading profit at Rs 1,500 crore. Dividend income, at Rs 45 crore for the quarter, was also seen below expectation.
Asset quality has further improved, with net non-performing assets falling for a 32nd quarter to 0.75 per cent, compared to 0.82 per cent during the same period last year. Non-performing loans of the individual portfolio stood at 0.62 per cent, while that of the non-individual portfolio stood at 0.91 per cent. The bank continued to make aggressive provisioning, with cumulative provision as on end-December at Rs 1,783 crore against a regulatory provisioning requirement of Rs 1,492 crore.
“Overall asset quality remained intact and HDFC continued to maintain a higher provision level compared with the mandatory requirement. The overall capital adequacy ratio stood at 17.5 per cent, with Tier-I at 14.9 per cent, indicating sufficient capital available for growth without any dilution,” said Rikesh Parikh, VP-markets strategy and equities, Motilal Oswal Securities.
HDFC expects the Reserve Bank of India (RBI) to bring down the interest rate during the third quarter review of monetary policy, which will bring down costs for the lender. “We expect RBI to cut the key policy rate by 25 bps on January 29. This will help us to reduce the cost of funds, though with a lag of one to two weeks. We will cut our lending rates as and when our cost of funds come down,” Mistry said.