Quarterly results: HDFC Q2 PAT falls 28% to Rs 2,870 crore

Housing Development Finance Corporation (HDFC) on Monday reported a 28% drop in its net profit for the September quarter to Rs 2,870 crore as it earned less from sale of investments and no dividend from its banking subsidiary because of a central bank directive. The bottom line also took a hit from increased provisioning, which stood at Rs 12,304 crore, up 68% y-o-y.

The net interest income, the difference between interest earned and interest expended, stood at Rs 3,647 crore, up 21% y-o-y. The net interest margin for the quarter rose 20 basis points sequentially to 3.3%.

Keki Mistry, vice-chairman and chief executive officer, said demand for housing loans has started to come back. “The growth in housing loans, or the pick-up in demand for individual housing loans, was much faster than what we had originally envisaged. Our individual loan disbursements in the July-September quarter were 95% of what they were in the second quarter last year,” he said. October has turned out to be an even better month, Mistry added, with loan disbursements being at 58% of what they were in October 2019 and inividual loan disbursements at 35% of year-ago levels.

During the quarter under review, individual loan application receipts grew 12% and approvals rose 9% compared to the year-ago period. The average size of individual loans stood at Rs 26.7 lakh. As on September 30, 2020, assets under management stood at Rs 5.4 lakh crore, up 10% y-o-y.

The gross non-performing asset (NPA) ratio fell 6 bps sequentially to 1.81%, with the ratio for the individual portfolio at 0.84% and that of the non-individual portfolio at 4.19%. In absolute terms, gross non-performing loans stood at Rs 8,511 crore. The overall collection efficiency for individual loans for the month of September was 96.3%. The collection efficiency for non-moratorium customers stood at 99.5%.

As per regulatory norms, HDFC was required to carry a total provision of Rs 5,621 crore. Of this, Rs 3,168 crore would be towards provisioning for standard assets and Rs 2,453 crore for NPAs.

Mistry said not too many customers had applied for the loan restructuring scheme. “The number so far is not very high, but we shouldn’t go by that. These are early days. We need to wait and watch what kind of restructuring would happen,” he said.

The capital adequacy ratio stood at 20.7%, of which tier-I capital was 19.5% and tier-II capital was 1.2%. As per regulatory norms, the minimum requirements for the CAR and tier-I capital are 14% and 10%, respectively.

Shares of HDFC ended at Rs 2,042.65 on the BSE on Monday, 6.24% higher than their previous close.