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SummaryHousing Development Finance Coporation (HDFC) reported a 10% y-o-y growth in profit after tax. The loan book grew 19% against the same quarter last year.

Housing Development Finance Coporation (HDFC) reported a 10% y-o-y growth in profit after tax. The loan book grew 19% against the same quarter last year. In an interview with

Vishwanath Nair, HDFC vice chairman and CEO Keki Mistry details the business outlook and expectations from RBI monetary policy. Excerpts:

This quarter, profit grew 10% year-on-year. What is your expectation for the rest of the year?

Don’t look at 10% as the bottom line number. The profit-on-sale of investments is not something that occurs every quarter. So you have to look at profit growth before sale of investments, before dividend income and before tax — there growth is 16%. The second point is that if you look at dividend income last year, the largest source of dividend income is HDFC Bank. Last year, HDFC Bank had paid dividend in the second quarter in July 2012. This year, they paid a dividend in June 2013. So what happens is that the dividend income which is a very huge sum of money got reflected in the first quarter of results and last year in the second quarter of results. So, naturally when you compare this year’s second quarter with last year’s second quarter you show a big decline in the dividends. You have to look at the growth before dividend, before profit on sale of investments which was 16%. That’s really the core operating profit.

How does the loan growth look for rest of the year?

We never guide in terms of profit, but I can tell you, in my view, the spreads should remain in the range of 2.2% to 2.3% and projected growth, before the selling loans, is around 18-20%. A bulk of it should come from the individual loan book.

On the non-performing loan side, you mentioned there is one chunky account which is HIRCO. Apart from that what are you seeing on the asset quality side?

See, on the individual loans front, there is no strain at all. We have seen lower NPAs in this quarter compared with the June quarter of 0.61% to 0.59% this quarter.

Have provisioning requirements eased?

There has been a change in the provisioning requirement from the National Housing Bank. The requirement has been lowered from 100 bps to 75 bps. That frees up about R45-50 crore of provisioning. So we’ve decided to free up that saving in provisioning, and that would be taken

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