Announcing this at HDFC's annual general meeting (AGM) on Friday, chairman Deepak Parekh said: "Loan sanctions for the quarter ended June 1999 touched Rs 848.73 crore while disbursals for the same period reached Rs 656 crore, up 23 per cent and 35.3 per cent respectively over the same period of the previous fiscal."

However, Parekh said that the sanctions and disbursals for individual loans in the first quarter have shown a much healthier growth of 38 per cent and 43 per cent, respectively. "The corporation is targeting Rs 5,000 crore in sanctions and Rs 4,200 crore in disbursals during the current fiscal and will not be announcing any bonus share issue this year," Parekh said, adding that the housing finance company has also received the `Euromoney Award' for the `Best Bank inIndia' this year.

Meanwhile, HDFC clocked a net profit of Rs 333.89 crore for 1998-99, up 13.8 per cent from Rs 293.35 crore achieved in the previous fiscal. The board of directors has recommended a dividend of Rs 85 for a Rs 100 share of the corporation.

"HDFC is also planning to enter the mutual fund and life insurance business. These developments will depend on many factors, including the passage of the Insurance Regulatory Authority (IRA) Bill by the parliament," Parekh said, adding that this is apart from the personal finance and infrastructure finance business for which HDFC has sought its shareholders' approval.

Parekh said that the high capital adequacy of 16.2 per cent (which consists entirely of tier-I capital) "is a drag on HDFC's return on equity. Therefore, to enhance the shareholder value, the corporation may use the buyback route, the details and timing of which are yet to be worked out. We are also awaiting a clarification from the Reserve Bank of India on the status of foreigninstitutional investor holding which will cross the maximum permissible holding of 30 per cent after any possible buyback exercised by the company."

Meanwhile, the HDFC scrip witnessed significant movement on the bourses. The HDFC scrip opened at Rs 2,445 on the Bombay Stock Exchange (BSE) and touched a high of Rs 2,530 before closing the day at Rs 2,490, up Rs 34 from Thursday's close of Rs 2,456. The counter clocked a relatively high volume of 54,700 shares on BSE.

HDFC will also be setting up 15 exchange centres to facilitate small shareholders to swap their shares held in physical form for the dematerialised form, and will not be charging any demat or custodial charges, Parekh said, adding that 68 per cent of the corporation's shares had already been dematerialised.

Insight

The performance in the first quarter is better than expectations. The tremendous demand from individuals is obvious from the fact that this category reported a 43 per cent growth in disbursals and 38 per cent growth inapprovals. This is clearly a result of the budgetary sops extended to housing loans.

The rapid growth in business for housing finance companies is not yet reflected in the earnings. The growth in Q1 net profit is just 15 per cent. But the growth will be reflected in the subsequent quarters with the stock expected to climb higher in coming days.