HDFC net jumps 42% on higher interest income

The cost to income ratio stood at 7.7%, compared to 9.0% in the same period last year.

Mortgage lender Housing Development Finance Corporation (HDFC) on Friday reported a 42% year-on-year (y-o-y) jump in its net profit to Rs 3,180 crore for the quarter ended March 2021 on the back of higher net interest income (NII).

The NII grew 14% y-o-y to Rs 4,065 crore. The bottom line grew despite a 19% y-o-y rise in provisions to Rs 13,025 crore. The lender has provided on a conservative basis against regulatory requirement to carry a total provision of Rs 5,491 crore during Q4FY21.

Keki Mistry, vice chairman and chief executive officer, said, “The second wave and partial lockdowns have brought new challenges, but given digitalisation of our operations as well as learnings from the past year we are confident that we are well equipped to face the year ahead.” The demand for home loans continued to remain strong owing to low interest rates, softer property prices, concessional stamp duty rates in certain states and continued fiscal incentives on home loans, Mistry said.

The net interest margin (NIM) for the quarter increased 10 basis points (bps) on a sequential as well as y-o-y basis to 3.5%. The spread on the individual loan book was 1.93% and on the non-individual book was 3.22%.

The collection efficiency for individual loans in March 2021 stood at 98.0% compared to 96.3% in September 2020.

The individual loan disbursements grew at 60% over the corresponding quarter of the previous year. March 2021 witnessed the highest levels in terms individual receipts, approvals and disbursements, according to the lender. Similarly, the growth in home loans was seen in both the affordable housing segment as well as high-end properties.

The asset quality saw some pressure during the March quarter. Gross non-performing loans ratio increased 7 bps to 1.98%, compared to gross non-performing loans of 1.91% in the December quarter on a proforma basis. Lenders had reported NPAs on a proforma basis during the December quarter due to a standstill from apex court on declaring NPAs.

The cost to income ratio stood at 7.7%, compared to 9.0% in the same period last year. “The reduction in the cost to income ratio during the year is attributed to Covid-19-induced lockdowns and restrictions, thus leading to lower expenses incurred on travel and conveyance, electricity charges and digitalisation initiatives have reduced expenses such as printing, stationary and postage charges,” HDFC said.

The capital adequacy ratio of the lender stood at 22.2% at the end of the March quarter, compared to the minimum regulatory requirement of 14%.

HDFC’s board approved dividend worth Rs 23/share with a face value of Rs 2. The board also approved fund-raising through non-convertible debentures (NCDs) or any hybrid instrument worth up to Rs 1.25 lakh crore on a private placement basis. Meanwhile, Keki Mistry, vice chairman and managing director of the home financier, was reappointed for another three years, subject to shareholders’ approval.