The net profit of Housing Development Finance Corporation (HDFC) has increased 16 per cent to touch Rs 147.76 crore for the six months ended September 30, 1998, up from Rs 127.9 crore during the corresponding period of the previous year.
HDFC reported a profit before tax of Rs 177.76 crore, an increase of 14 per cent over the corresponding period last year. The profit growth of HDFC has, in fact, decelerated from around 20 per cent earlier.
Speaking to Business Standard, Deepak Parekh, chairman HDFC said, "The fall in the profit growth is due to the fact that the corporate loans and lending to builders are down."
With the slowdown in the economy, corporates loans are down and HDFC has consciously stopped lending to builders due to the recession in the realty sector.
"The spreads in loans to individual are thin and debt given to corporates and builders attract wider spreads. However with corporate loans slowing down and loans to builders being stopped, the spreads of HDFC is under pressure," Parekh said.The slowdown is despite the fact that individual loans have grown by over 40 per cent.
Analysts, however, point out that a 16 per cent growth in net profit is good given the sluggish condition in the economy. During the six-month period, the total assets of the corporation rose to Rs 11,346 crore (Rs 8,628 crore).
Loan approvals increased by 32 per cent to touch Rs 1,869 crore and disbursements amounted to Rs 1,510 crore, representing an increase of 33 per cent.
"Retail loan growth during the first six months has been robust as a result of increased affordability due to fall in property prices and lower interest rates," HDFC said.
Approvals and disbursements in respect of individual loans were higher by 41 per cent and 43 per cent, respectively, for the six months ended September 1998 as compared with the corresponding period in the previous year.
Repayments during the six months were Rs 896 crore. The non-performing assets (NPAs) of HDFC were 0.94 per cent of the income-earning assets.
The balance in the provision for contingencies is more than adequate to cover the principal outstanding on NPAs.
