Housing Development Finance Corporation (HDFC) reported 1.7% fall in standalone net profit to Rs 3,000.67 crore on a 10.4% fall in total income to Rs 11,663.14 crore in Q1 FY22 over Q1 FY21.
The net interest income (NII) for the quarter ended 30 June 2021 stood at Rs 4,147 crore compared to Rs 3,392 crore in the previous year, representing a growth of 22%. The reported Net Interest Margin (NIM) was 3.7%.
The spread on loans over the cost of borrowings for the quarter ended 30 June 2021 was 2.29%. The spread on the individual loan book was 1.93% and on the non-individual book was 3.32%.
For the quarter ended 30 June 2021, cost to income ratio stood at 8% compared to 9% in the previous year.
Profit on sale of investments was Rs 263 crore in the first quarter as compared with Rs 1,241 crore in the same period last year.
Total expenses during the quarter declined by 17.6% YoY to Rs 7,758.57 crore, primarily due to lower finance cost (down 16.6% YoY) and lower impairment on financial instruments (down 42.8% YoY).
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Profit before tax in Q1 FY22 stood at Rs 3,904.57 crore, up by 8.3% from Rs 3,606.83 crore in Q1 FY21. Total tax expense rose 62.8% YoY to Rs 903.90 crore during the period under review.
HDFC said that the quarter ended 30 June 2021 witnessed the eruption of a second wave of COVID-19 in India. There was a sharp increase in infections and morbidities during the second wave compared to the first wave of the pandemic. A significant part of the quarter ended 30 June 2021 entailed localized lockdowns and restrictions.
The second wave, however, was less disruptive compared to the corresponding quarter of the previous year where there was a national lockdown. In addition, there now is a significant increase in the usage of digital platforms to conduct business. During the quarter ended 30 June 2021, 88% of new loan applications were received through digital channels.
During the quarter ended 30 June 2021, individual loan disbursements grew 181% over the corresponding quarter of the previous year. Growth in home loans was seen in both, the affordable housing segment and high-end properties. There was a preference for ready to move in properties compared to under construction properties.
The demand for home loans continues to remain strong and disbursements have picked up with the unlocking of respective locations. While disbursements during April and May of the current financial year were somewhat impacted, business has reverted to normalized trends in the months of June and July. July 2021 disbursements were the highest ever in a non-quarter end month.
Disbursements between April to July 2021 i.e. four months were 108% of the disbursement levels achieved during the first six months of the previous year.
The average size of individual loans stood at Rs 30.9 lakh, as compared to Rs 29.5 lakh in FY21.
As at 30 June 2021, the assets under management stood at Rs 5,74,136 crore as against Rs 5,31,186 crore in the previous year. Individual loans comprise 78% of the assets under management (AUM) as on 30 June 2021. On an AUM basis, the growth in the individual loan book was 14% and growth in the total loan book was 8%.
During the quarter ended 30 June 2021, the corporation assigned loans amounting to Rs 5,489 crore (previous year: Rs 1,376 crore) to HDFC Bank. As at 30 June 2021, the outstanding amount in respect of individual loans sold was Rs 73,471 crore. HDFC continues to service these loans.
The overall collection efficiency ratio for individual loans has improved during the month of June'21 to pre-COVID levels. The collection efficiency for individual loans on a cumulative basis in June 2021 stood at 98.3% compared to 98% in March 2021.
Individual NPAs increased due to slippages on account of the impact of the second wave of the pandemic. Collection efforts were hindered due to the recovery teams being unable to do field visits during the lockdown period.
Further, various court orders temporarily curbing recovery efforts of financial institutions, including refraining possession activities under SARFAESI hampered the collection efforts.
As per regulatory norms, the gross non-performing loans as at 30 June 2021 stood at Rs 11,120 crore. This is equivalent to 2.24% of the loan portfolio.
As per regulatory norms, the corporation is required to carry a total provision of Rs 5,778 crore. Of this, Rs 2,443 crore is towards provisioning for standard assets and Rs 3,335 crore is towards non-performing assets.
The provisions as at 30 June 2021 stood at Rs 13,189 crore. The provisions carried as a percentage of the exposure at default (EAD) is equivalent to 2.64%.
As at 30 June 2021, Rs 4,482 crore has been restructured under the RBI's Resolution Framework for COVID-19 Related Stress (OTR 1& 2.0). This is equivalent to 0.9% of the loan book. Of the loans restructured, 38% are individual loans and 62% non-individual loans. Of the total restructured loans, 62% is in respect of just one account.
Cumulative COVID-19 provision as at 30 June 2021 was Rs 1,017 crore.
As of date, the corporation's capital adequacy ratio stood at 22%, of which Tier-I capital was 21.3% and Tier II capital was 0.7%. As per the regulatory norms, the minimum requirement for the capital adequacy ratio and Tier I capital is 15% and 10% respectively.
For the quarter ended 30 June 2021, the consolidated profit after tax attributable to the corporation stood at Rs 5,041 crore as compared to Rs 3,614 crore in the previous year, representing a growth of 39%. Total income during the quarter rose 3.5% YoY to Rs 30,997.13 crore.
The corporation stands comfortable on liquidity. The average daily balance in liquid funds during the quarter ended 30 June 2021 was Rs 15,200 crore, lower than Rs 32,000 crore in the corresponding quarter of the previous year, thus reducing the negative carry.
The corporation has continued to raise resources from a diversified base. Outstanding deposits as at 30 June 2021 stood at Rs 1,53,704 crore and continued to form a major source of funding during the year. The online deposits platform has been very well received by both, customers and deposit agents.
HDFC is engaged in financing by way of loans for the purchase or construction of residential houses, commercial real estate and certain other purposes, in India. HDFC's distribution network spans 603 outlets which include 202 offices of HDFC's distribution company, HDFC Sales (HSPL). To cater to non-resident Indians, HDFC has offices in London, Dubai and Singapore and service associates in the Middle East.
The scrip rose 0.43% to currently trade at Rs 2451.15 on the BSE.
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