HDFC net profit in Q3 rises 13%, loan growth slows down
1 min read . Updated: 03 Feb 2023, 12:31 AM IST
PremiumAs of 31 December, HDFC’s assets under management stood at ₹7.01 trillion against ₹6.18 trillion in the year ago
Housing Development Finance Corp (HDFC) on Thursday reported a 13% rise in net profit for the third quarter, owing to lower other income and provisions.
Its net profit stood at ₹3,691 crore at the end of December quarter against ₹3,260 crore in the year-ago, while net interest income was at ₹4,840 crore up 13% from ₹4,284 crore in the year earlier. Net interest margins improved to 3.5% in Q3 from 3.4% in Q2FY23.
As on 31 December its assets under management stood at ₹7.01 trillion against ₹6.18 trillion in the year ago. Individual loans comprised 82% of AUM. On an AUM basis, growth in its individual loan book was 18%. Loan book grew 13% yoy due to a sharp sequential fall in non-individual book. However, the corporate loan book was hit, as a few categories, such as loan against shares, awaits approval for grandfathering from RBI as part of the merger process with HDFC Bank.
The management said it does not expect much impact on its loan growth from the recent rate hikes. “The demand for home loans and pipeline of loan applications continues to remain strong. When interest rates go up, for the first 8-10 days we see slowdown in the number of applications. Once that is over, the number of applications will reverse. It is a temporary phenomenon. Because we had frequent increase in interest rate hikes, the growth was affected. Once interest rate hikes stabilise, we should see steady and rising growth," said Keki Mistry, chief executive, HDFC, in a call to analysts.
Its asset quality was stable with gross individual non-performing loans at 0.86% of the individual portfolio as of 31 December, and gross non-performing non-individual loans stood at 3.89% of the non-individual portfolio. It carried total provisions of ₹13,274 crore, or 2.21% as a percentage of the exposure at default.
Furthermore, the corporation’s capital adequacy ratio stood at 23.7%, of which tier I capital was 23.2% and tier II capital was at 0.5%. According to regulatory norms, minimum requirement for capital adequacy ratio and tier I capital is 15% and 10%, respectively.
“Retail loan growth on AUM basis was running at 20% YoY for the past couple of quarters. It has now slowed down to 18% YoY for 3QFY22E. Home loan rates are up 200 basis points-plus from the bottom in the past one year, and that perhaps could have dented demand in our view," said Macquarie in a report.
