HDFC Ltd, the largest housing finance company in India, on Monday reported an 11.9% rise in its net profit at Rs 1,701.21 crore for the quarter ended December 31, after providing for Rs 830 crore in taxes.
Though the profit is higher than expectations, it was under pressure after demonetization slowed down disbursements as the real estate sector was among the sectors hit the most. The Board also approved a proposal to raise Rs 35,000 crore through private placement of non-convertible debentures to fund its business expansion.
During the quarter, its total income rose 12% to Rs 8,137.2 crore compared to Rs 7,268.4 crore. Net interest income (NII) rose 17.2% over the previous year to Rs 2,769.86 crore. Net interest margins (NIM) stood at 4.14% as compared to 3.9 % in the year-ago quarter, mainly on account of a reduction in incremental funding by 0.22% during the quarter.
Its loan book rose 16% to Rs 2,86,876 crore with both individual and corporate loans growing but at a slower pace. The individual loan book rose 15%, slowing from the 17% growth levels that the housing finance companies had maintained over the preceding quarters.
Keki Mistry, vice chairman and chief executive officer of HDFC, said at a press conference in Mumbai, “The dip in disbursements is largely on account of the fall in real estate prices triggered by the government’s demonetization decision. The situation should normalise over the course of the next two months.”
On Monday, HDFC shares closed 0.13% at Rs 1368.90 on Bombay Stock Exchange (BSE).
The asset quality of the HFC was stable. Provisions increased 72.1% to Rs 117 crore from Rs 68 crore last year. On a sequential basis, provisions increased 23.2%. Gross non-performing assets rose to 0.81% of the loan portfolio versus 0.76% in the July-September quarter.
Gross non-performing loans (NPAs) as at December 31, 2016, amounted to Rs 2,341 crore, or 0.81% of the loan portfolio. The non-performing loans of the individual portfolio stood at 0.65% while that of the non-individual portfolio stood at 1.16%. As per the National Housing Bank norms, the company is required to carry a total provision of Rs 2,263 crore, of which Rs 1,505 crore is against standard assets. The provisions as on December 31, 2016, stood at Rs 3,198 crore, of which Rs 705 crore is on account of non-performing loans. This provision is equivalent to 1.11% of the portfolio.