Mortgage lender Housing Development Finance Corporation (HDFC) on Thursday reported a 21.6% year-on-year (Y-o-Y) decline in its standalone net profit to Rs 2,044.2 crore for the quarter ended March 31, 2017. The profit for the quarter under review is substantially lower on a Y-o-Y basis as the company had earned a profit of Rs 1,519 crore on sale of investments during the same quarter last year. The net interest income (NII) for Q4 soared to Rs 3,122.61 crore, compared with Rs 2,759.49 crore in Q4FY16, representing a rise of 13.2%.
The lender’s total income for the quarter stood at Rs 8,514.51 crore, 7.7% lower than the year-ago period. Its net interest margin (NIM) for the year stood at 4.1%, the same as in the previous year. The spread on loans over the cost of borrowings in FY17 stood at 2.33%, compared with 2.29% in the previous year. The spread on individual loans was 1.99% while the same was 3.09% for non-individual loans.
Keki Mistry, vice-chairman and CEO, said while NIMs should decline every year because of a higher debt-to-equity ratio, spreads would remain stable. “We expect spreads to remain between 2.25% and 2.35% which is where it had been in the last many years,” Mistry told FE. On an assets under management (AUM) basis, the growth in the individual loan book was 16% Y-o-Y, while it was 17% year-on-year for the non-individual loan book, thus taking the growth in the total loan book to 16%.
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Of total loans, individual loans comprised 73%, and 71% of the incremental growth in the loan book came from individual loans during FY17. As on March 31, the loan book stood at Rs 2.96 lakh crore and outstanding individual loans sold or assigned were Rs 41,296 crore. In FY17, under the loan assignment route, HDFC sold individual loans amounting to Rs 16,027 crore. “The residual income on the individual loans sold is 1.24% per annum and is being accounted for over the life of the loans and not on an upfront basis,” Mistry said. Its gross non-performing loans stood at Rs 2,378 crore or 0.79% of the loan portfolio.
While bad loans of the individual portfolio stood at 0.61%, that of the non-individual portfolio was at 1.16%. Provisions as on March 31 stood at Rs 3,067 crore, of which Rs 738 crore was on account of non-performing loans. This provision is equivalent to 1.02% of the portfolio. HDFC’s capital adequacy ratio stood at 14.5%, of which Tier-I capital was 11.8% and Tier-II capital was 2.7%. Shares of the company on Thursday closed down 0.42% at Rs 1,564.40 on the BSE.