Mumbai: Housing Development Finance Corp. Ltd (HDFC), India’s oldest mortgage lender, said stand-alone third-quarter (Q3) profit rose 16.2% driven by strong loan demand from people buying property, although the figure came in slightly below estimates.
Net profit rose to Rs.1,140.1 crore, or Rs.7.29 per share, in the quarter ended 31 December from Rs. 981.25 crore, or Rs.6.56 per share, a year ago. Profit was lower than the Reuters estimate of Rs.1,196 crore. The total loan book rose 21.7% to Rs.1,60,941 crore from Rs.1,32,208 crore in the year-ago period. Gross non-performing loans by the end of December narrowed to 0.75% of the total portfolio from 0.82% in the year ago, an HDFC release said.
HDFC dropped 0.95% to Rs.814.5 on Monday on the BSE, while the benchmark Sensex gained 0.31% to 20,101.82 points. The results were announced during market hours.
Loan growth to individuals rose 31% year-on-year, much faster than the 25% growth seen in the overall loan book. The growth came after the central bank kept policy rates unchanged during the quarter, but strongly indicated a reduction in the first quarter.
“Demand for loans from individuals grew at 31%, much better than the 25% growth in overall demand, including companies,” said Keki Mistry, vice-chairman and chief executive, HDFC. “This demand was higher despite the fact that we sold Rs.1,021 crore of loans to HDFC Bank.”
HDFC has an agreement with HDFC Bank Ltd under which the bank buys home loans from the mortgage firm. On Friday, HDFC Bank reported a 30% increase in December quarter profit to Rs.1,859 crore. On a consolidated basis, HDFC’s net profit rose 27% to Rs.1,706 crore from Rs.1,337 crore. Profit from its subsidiary life insurance, asset management and general insurance businesses also rose.
HDFC Standard Life Insurance Co. Ltd recorded a more than 12-fold increase in profit to Rs.127 crore from Rs.10.28 crore a year ago. HDFC Asset Management Co. Ltd recorded a 20% increase in profit to Rs.114 crore.
The contraction in bad loans was the 32nd consecutive quarter in which the percentage share has dropped from the year-earlier period, HDFC said in its release. Non-performing loans to individuals narrowed to 0.62% of the loan book.
However, provisions increased to Rs.46 crore from Rs.28 crore in the same period last year. Mistry said that was because HDFC always sets aside more money than needed. “However, since the standard provisioning has kicked in this financial year, we do not need to keep aside excess money. We will decide whether we have to continue such high provisions or no,” he added.
HDFC received Rs.45 crore as dividend from firms, down from Rs.194 crore in the quarter ended September. “This time though the dividend is down Rs.150 crore, quarter-on-quarter profit is only lower by Rs.11 crore, which is a good sign, indicating profit is coming from home loans,” Mistry said. HDFC’s profit in the quarter ended September was Rs.1,151 crore.
Dinesh Shukla, an analyst at Sharekhan Ltd, said the results were in line with expectations.
“There has been a steady demand for loans from individuals which is less risky because the risk weightage is lower compared to companies. The loan size for individuals is also lower, and unlike realty projects which need to be chosen carefully, there is no such risk to loans to people,” he said.