HDFC Q1 net flat at Rs 3,001 crore; individual home loans grow 22%

Topics HDFC loan | HDFC | HDFC Bank

The country’s largest mortgage lender, Housing Development Finance Corp (HDFC), on Monday reported a marginal drop in net profit for the first quarter as expenses rose.


On a standalone basis, net profit was at Rs 3,000.67 crore compared to Rs 3051.52 crore in the year-ago period, according to a BSE filing.


Keki Mistry, vice-chairman and chief executive officer of HDFC, said the profit number for Q1FY22 is not directly comparable with that of the previous year for various reasons, including higher tax rate of 23.1 per cent this year against 15.4 per cent last year.


Total tax expense for Q1 was at Rs 903.90 crore against Rs 555.31 crore a year ago. Profits from sale of investments were down to Rs 263 crore, from Rs 1,241 crore in Q1FY21. It had dividend income of Rs 16 crore against Rs 298 crore last year, while the cost for employee stock options rose to Rs 146 crore from Rs 1 crore a year ago.


Its stock closed 0.88 per cent higher at Rs 2,462.3 per share on the BSE.


Net interest income (NII) rose 22 per cent to Rs 4,147 crore compared to Rs 3,392 crore in Q1FY21. At 98.3 per cent, the overall collection efficiency ratio for individual loans reached pre-Covid levels in June compared to 98 per cent in March 2021. Net interest margin was at 3.7 per cent.


Despite the second wave of Covid disrupting business, the individual loan book — after adding back loans sold in the preceding 12 months — grew 22 per cent.


The growth in the total loan book after adding back loans sold was 12 per cent.


Its assets under management rose to Rs 5.74 trillion against Rs 5.31 trillion a year ago.

Individual loan disbursements grew 181 per cent YoY in Q1. There was growth in both the affordable housing segment and high-end properties. The demand for home loans continues to remain strong and disbursements have picked up with states removing curbs. While disbursements during April and May 2021 were somewhat impacted, business reverted to normalised trends in June and July.


“Disbursements in July 2021 were the highest ever in a non-quarter end month,” it added. Individual non-performing assets (NPAs) increased on account of the second wave, while collection efforts were hindered due to recovery teams being unable to do field visits during the lockdown period. Gross NPAs were at Rs 11,120 crore, equivalent to 2.24 per cent of the loan portfolio.


Various court orders temporarily curbing recovery efforts of financial institutions, including refraining possession activities under SARFAESI, also hampered the collection efforts.


In line with regulatory norms, the firm is required to carry a total provision of Rs 5,778 crore. Of this, Rs 2,443 crore is towards provisioning for standard assets and Rs 3,335 crore is for NPAs. Cumulative Covid provision was at Rs 1,017 crore in Q1. Expected credit loss charged to the profit and loss statement was Rs 686 crore against Rs 1,199 crore in Q1FY21.


It restructured Rs 4,482 crore of loans under the RBI’s resolution framework for Covid-related stress. This is equivalent to 0.9 per cent of the loan book. Of the loans restructured, 38 per cent are individual loans and 62 per cent non-individual.


Capital adequacy ratio was at 22.0 per cent, with Tier I capital of 21.3 per cent and Tier II capital was 0.7 per cent at end of June.


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