New Delhi: India’s largest mortgage lender Housing Development Finance Corp. Ltd (HDFC) Thursday reported a standalone profit of Rs2,044.20 crore for the March quarter, in line with analysts’ estimates.
A Bloomberg poll of 22 analysts had pegged HDFC’s fourth quarter earnings at Rs2,020 crore. HDFC’s profit was a 2% from the Rs2,607.05 crore it posted a year ago. However, the numbers are not strictly comparable because the firm had sold shares in HDFC Standard Life Insurance Co. Ltd for Rs1,513 crore in the March quarter of 2016 and also made a one-time special provision of Rs450 crore.
Income from operations increased 9.9% to Rs8,453.41 crore as it financed more homes.
In a statement, HDFC said its loan book grew to Rs2.96 trillion by the end of March, up 14.3% from a year ago. The company also sold Rs16,027 crore worth of loans in the last 12 months.
When these loans sold are added back, HDFC’s growth in its retail loan book was 23%. In the corporate segment, the growth was 17%, which was largely led by increased demand in commercial lease rental discounting.
“While the impact of demonetisation was transitory, it did result in subdued disbursement growth, particularly in the third quarter and part of the fourth quarter of the financial year under review. By the end of the financial year, the individual disbursement growth trajectory began normalising,” HDFC said in an emailed statement.
During the year, HDFC improved its loan spread to 2.33% compared to 2.29% in fiscal 2016. The spread on individual loans was 1.99% and on the non-individual loans it was 3.09%, the company said.
The strong growth in loan book and improvement in margins helped HDFC post a 12% growth in operating profit for the March quarter. Provisions for the three months ended March stood at Rs148 crore compared to Rs117 crore in the previous quarter.
HDFC maintained its asset quality. Gross non-performing loans at the end of March stood at Rs2,378 crore, or about 0.79% of its loan book. The retail book had a gross bad loans ratio of 0.61%, the non-individual loan book 1.16%. The mortgage lender said it had set aside provisions worth over 1% of its loan book.
While the bank’s management refused to guide for growth in the current fiscal, it said that affordable housing was a new segment.
“The growth came across the country, especially from outskirts of the cities and smaller towns given our average loan size of Rs25 lakh. We are looking at affordable housing in a big way,” said Keki Mistry, vice-chairman and chief executive officer at HDFC.
The government has provided a big thrust to housing finance by announcing a credit-linked subsidy scheme under which an interest subsidy of 4% is given on housing loans of up to Rs9 lakh and 3% on housing loans of up to Rs12 lakh. According to credit information provider TransUnion CIBIL, the affordable housing segment has grown at an average annual rate of 23% from fiscal 2012 to 2016. “HDFC will continue to grow at 15-16% year on year without any deterioration in the asset quality. On relative valuation, we prefer other housing finance companies. We continue to maintain neutral rating on the stock,” said Siddharth Purohit, an analyst at Angel Broking Ltd.
HDFC also declared a final dividend of Rs15 per equity share for the quarter.
Shares of HDFC closed at Rs1,564.40 on BSE, down 0.42%, while the benchmark Sensex gained 0.77% to 30,126.21 points.