Mortgage lender Housing Development Finance Corp. Ltd’s loan book increased by Rs2,302 crore in the three months to March, but the rise was entirely due to loans to corporate firms, which increased by Rs3,382 crore during the quarter.
In contrast, HDFC’s outstanding on loans to individuals fell from Rs55,899 crore at the end of December to Rs54,889 crore at end-March. As a result, loans to individuals formed 64.4% of loans outstanding, compared with 67.4% at end-December. Moreover, HDFC’s investment in debentures and corporate deposits for financing realty projects increased sharply during the quarter, from Rs792 crore on 31 December to Rs1,291 crore on 31 March.
Disbursements during the March quarter were up 17.5% year-on-year, about the same as the 17.6% y-o-y growth in the December quarter. But there was good news on loan approvals, which picked up during the March quarter.
For the full fiscal year to March, growth in loan approvals was 16% y-o-y, one percentage point higher than the y-o-y growth during the nine months to December. During the March quarter, growth in approvals increased to 20% y-o-y.
HDFC’s profit before other income, tax and exceptional items during the March quarter was 16% higher than during the same quarter of the previous fiscal year. That’s even lower than the 18.7% y-o-y growth for the same metric during the December quarter.
Also, the growth in profit during the quarter has come from other operating income rather than from net interest income. That’s seen from the fact that the y-o-y growth in profit before other income, tax and exceptional items has been Rs141 crore, while the growth in other operating income has also been Rs141 crore.
Nevertheless, the results are far better than what the street anticipated, primarily because growth in disbursements in the quarter was better than expected. That’s probably why the stock shot up 13% on Monday.
HDFC’s percentage of bad debts has also come down. The company’s book value per share, however, was lower at Rs462 at the end of March, compared with Rs474 at the end of December, thanks to the dividend declared.
While the growth in approvals is a good sign, much depends on how much of that is on account of loans to individuals and how much consists of more risky loans to developers.
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