Keki Mistry, vice chairman and managing director, HDFC, told dna, "The home loan growth was good from the Tier 2 and 3 towns and suburbs of large cities. We will continue to see similar growth during the year."
Housing finance major HDFC reported a 37% rise in net profit of Rs 1,871 crore for the quarter ended June 30, 2016, driven in part by a Rs 725 crore profit on sale of part of its stake in HDFC Ergo General Insurance Co.
However, the business growth was moderate during the quarter with a 17% growth in its assets under management.
Keki Mistry, vice chairman and managing director, HDFC, told dna, "The home loan growth was good from the Tier 2 and 3 towns and suburbs of large cities. We will continue to see similar growth during the year."
HDFC has also got the Board approval to raise Rs 35,000 crore through a private placement. The board approved for issuance of secured redeemable non-convertible debentures (NCDs) to raise the money.
The scrip closed 1.48% up at Rs 1,387.80 on BSE.
The growth in the individual loan book was 18% and non-individual loan book grew at 12%, excluding loans that were sold off to HDFC Bank. Gross non-performing loans as at June 30, 2016 amounted to Rs 2,006 crore, equivalent to 0.75% of the loan portfolio. Of this, the NPAs from the individual portfolio stood at 0.59% while that of the non-individual portfolio stood at 1.11%.
The average home loan size was at Rs 25.3 lakh. HDFC's income from operations rose to Rs 8,311.24 crore for the quarter ended June 2016, up 7.44% as against Rs 7,735.52 crore a year before.
Siddharth Purohit, senior equity ananlyst, Angel Broking said, "While this looks better than the growth witnessed in 4QFY16, it still remains sluggish, partly due to sell-down of loans. Higher sell-down of assets and competitive pressure seems to have put some pressure on net interest margins (NIM) during the quarter where in the NIM was down 0.10% over the preceding quarter to 3.8%. During the quarter HDFC booked gains of Rs 725 crore on its sell of 22.9% stake in general insurance business and hence the profit after tax looks higher at Rs 1,871 crore However, adjusting for the onetime gain and Rs 275 crore worth of additional provisions it was more or less in line with expectations."
The provisions for contingencies climbed 580% over the preceeding year to Rs 340 crore but declined 37.6% over the preceding quarter. This included a one-time provision of Rs 275 crore towards standard assets and other contingencies. As per NHB norms, the company is required to carry a total provision of Rs 1,979 crore of which Rs 1,370 crore is against standard assets.
The balance in the provision for contingencies account as at June 30, 2016 stood at Rs 3,025 crore of which Rs 557 crore is on account of non-performing loans. This balance in the provision for contingencies is equivalent to 1.14% of the portfolio.
HDFC's capital adequacy ratio stood at 16.5%, of which Tier I capital was 13.1% and Tier II capital was 3.4%.
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