Mumbai: Housing Development Finance Corp. Ltd (HDFC), India’s largest mortgage company, on Monday said its stand-alone net profit rose 19% to Rs.1,151 crore in the quarter ended 30 September, on the back of strong demand for home loans.
The earnings were in line with a Bloomberg survey of 30 analysts that had predicted a net profit of Rs.1,147 crore.
HDFC’s total income rose to Rs.5,269 crore in the three months ended 30 September from Rs.4,164 crore a year earlier. Its net interest income rose 18% to Rs.1,634 crore.
Conrad D’Souza, member of executive management at HDFC, said demand for loans grew about 18-19% during the quarter and that the company expects it to grow in that range for the rest of the fiscal year.
“Demand continues to be strong, and with interest rates having a downward bias, we expect demand for loans from salaried individuals to continue to grow,” D’Souza said. HDFC’s loan book increased by Rs.7,000 crore in the quarter ended September, he added.
“As of 30 September 2012, the loan book stood at Rs.1.55 trillion, up from Rs.1.26 trillion in the previous year,” HDFC said in a statement.
On a consolidated basis (including the profits of its subsidiaries) also, HDFC’s net profit increased 19% to Rs.1,575 crore in July-September from Rs.1,328 crore in the corresponding period last year.
Earnings per share improved to Rs.10.32 from Rs.8.88 last year.
HDFC shares dropped 0.21% to close at Rs.750.50 each on Monday on the BSE even as the bourse’s 30-share benchmark index Sensex rose 0.59% to close at 18793.44 points. The results were announced during market hours.
Higher revenues from the mortgage business apart, a three-and-a-half times rise in revenue from the life insurance business aided the consolidated profit substantially.
Revenue from the life insurance business rose to Rs.4,599 crore from Rs.995 crore last year.
Demand for home loans from individuals, which is HDFC’s main business, grew faster than the corporate segment. “The growth in the individual loan book, inclusive of loans sold, is 31% (24% net of loans sold) whereas the non-individual loan book grew by 19%. The growth in the total loan book, inclusive of loans sold, is 27% (22% net of loans sold),” HDFC said.
Of the total loan growth, 78% was on account of the increase in the individual loan book. The average size of an individual loan is Rs.21.5 lakh at HDFC.
Santosh Singh, who tracks the company at Espirito Santo Securities, said the results are “stable” and in line with what the market expected.
“Profits have grown 19%, the net interest margin is stable, and there is nothing to worry about its non-performing loans. So long as demand for home loans continues, HDFC will do well because over the year they have shown that even competition from banks does not bother them,” Singh said.
Total non-performing loans at Rs.1,206 crore was equal to 0.77% of the loan book, down from 0.82% in the same period in 2011.
“This is the thirty-first consecutive quarter end at which the percentage of non-performing loans has been lower than the corresponding quarter in the previous year,” HDFC said. Non-performing loans of the individual portfolio stood at 0.65% while that of the corporate portfolio stood at 0.89%, HDFC said.
HDFC’s net interest margin at 4.2% was down from 4.3% last year, but Singh said it has always been in the 4.2-4.3% range.
“HDFC has been incrementally growing its individual loan book much faster than its corporate book over the last six months in order to improve its margins and non-interest income such as processing fees. Including loans sold, around 80% loans over the last six months have been disbursed to the individual segment,” Vaibhav Agrawal, vice-president, research, at Angel Broking Ltd, said in a note after the results were announced.