Feb 2, 2021

Country’s largest mortgage lender HDFC reported a net profit of Rs 2,925.83 crore in October–December quarter (Q3) of FY21, down 65 per cent from a profit of Rs 8,372.49 crore in the corresponding period of FY20. However, the profit figures are not comparable because in Q3FY20, it booked a fair value gain of over Rs 9,000 crore due to merger of Gruh Finance with Bandhan Bank. Also, in the reporting quarter, it has booked a profit of Rs 157 crore by selling a part of its stake in HDFC Life Insurance to adhere to the regulatory requirements. Hence, in a like-for-like comparison, discounting all other factors, the mortgage lender’s net profit was up 27 per cent to Rs 3,694 crore, compared to Rs 2,908 crore in the year ago period. Net interest income (NII) of the lender was up 26 per cent to Rs 4,068 crore in Q3FY21 compared to Rs 3,239.92 crore in Q3FY20. It has slowly started reducing the amount of excess liquidity it was carrying which explains the strong rise in NII. In Q1, it was carrying excess liquidity to the tune of Rs 32,000 crore and in Q2 it was 24,800 crore. In Q3, it has been reduced to Rs 17,000 crore. Net interest margin at the end of nine months of FY21 was 3.4 per cent. For the lender, loan approvals for individuals in Q3 was higher by 32 per cent compared to what it was in corresponding period of last financial year. Similarly, disbursements were higher by 26 per cent. “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”, the lender said. Furthermore, it said, the month of December 2020 witnessed the highest ever levels in terms of receipts, approvals and disbursements. It iterated the fact that this is not pent up demand as 91 per cent individual disbursements in Q3 consisted of property deals entered over the past four months. “Growth in home loans was seen in both, the affordable housing segment as well as high-end properties”, the mortgage lender said. “In the nine month period, 80 per cent of the growth in the loan book has been in the individual segment and 20 per cent in the non-individual segment. But as much as 137 per cent growth during the quarter came from individual loans and non-individual loan book de grew 37 per cent”, said Keki Mistry, Vice Chairman & CEO, HDFC. As far as asset quality is concerned, its reported gross non-performing loans (NPL) stood at 1.67 per cent. If not for the Supreme Court order on asset classification standstill, its NPL would have risen to 1.91 per cent, with individual loan portfolio NPL at 0.98 per cent and non-individual loan portfolio at 4.35 per cent. Collection efficiency of the lender has improved and is nearing pre-covid levels. As of December, collection efficiency in the individual loan book stood at 97.6 per cent compared to 96.3 per cent in the September quarter. In Q3, the lender’s expected credit loss is to the tune of Rs 594 crore compared to Rs 2,995 crore in the year ago period. However, it is carrying Rs 12,342 crore as provision on its books as of December end. “For covid, we still continue to carry a provision of Rs 959 crore and we will in due course reduce provisions”, Mistry said. Under RBI’s covid restructuring package, the lender has restructured Rs 5,010 crore worth of loans, which is 0.9 per cent of its asset under management (AUM). “Of this Rs 5,010 crore worth of loans which have been restructured, 26 per cent comes from individual loans and 74 per cent comes from non-individual loans and as much as 52 per cent of the total restructured book is in respect of one account”, Mistry said. As of December end, loans on an AUM basis stood at Rs 5.52 trillion as against Rs 5.05 trillion in the previous year. Shares of the lender closed at Rs 2,657.65, up 2.91 per cent from previous days close on the BSE.