Housing Development Finance Corporation (HDFC) has denied reports suggesting that the Citi group which is raising resources for its survival would be selling its 11.74% stake in the housing finance company. Citi stake in the HDFC would be worth around Rs 5500-Rs 6000 crore.
Speaking to the reporters on the sidelines of HDFC?s annual general meeting in Mumbai on Wednesday, its chairman, Deepak Parekh, said that ?I have already met the Citi officials to know about their plan, but they have said that they were not selling their stake as of now?. Even if they go for selling their stake, nearly half a dozen firms are ready to purchase Citi stake, he said.
HDFC is targeting a 25-30% growth in 2008-09 on account of prevailing robust demand from its retail customers, Parekh said.
?Property prices will come down in the near future. We have already seen prices softening by 15-20% in certain pockets such as Delhi, Mumbai and Bangalore,? he informed. Asked to comment on the impact of the interest rate hikes on the real estate sector, Parekh said that tier II and tier III cities of the country have seen a spurt in demand for houses and the developers have huge landholdings in their possession . ?Though high interest rate was always painful for the borrowers, I think my borrowers were ready in case the interest rates are further hiked by 100-200 basis points in case the inflation crosses 17% mark, as predicted by recent studies, said Parekh.
Parekh said that 87% of his loan books are filled by the borrowers with floating interest rates and hence they have been affected by the recent rate hikes. On GDP growth projections, Parekh said that it may come down to 7.5%, still I feel that it would be fine if we are able to maintain this figure of growth. Parekh said that we have to sacrifice growth to contain inflation. He hoped that it may take six months for inflation to come down from its present level.
HDFC has written to the National Housing Bank (NHB) urging it to treat HDFC in line with the industry. As per existing norms 90-day cooling off period of deposits was required by the regulator as the eligibility criterion to going for housing loans. While cost of fund of HDFC has gone up to 8.88% this year, its net interest margins have increased to 2.26% from 2.22% a year ago.
The gross non-performing assets where installments are outstanding for more than 90 days as at March 2008 stood at RS. 621.01 crores . This is equivalent to 0.84% of the loan portfolio as compared to 0.92% of the loan portfolio during the previous year. The actual balance in the provision for the contingencies account as at March, 2008 stood at RS. 470.30 Crores, which is equivalent to 0.63% of the loan portfolio.
The spread on loans stood at 2.32% per annum as against 2.18% per annum in 2006-07. Also the corporation’s cost to income ratio stood at 9.3% in March 2008 as against 12% in the previous year and continues to be the amongest the lowest in the the financial sector in Asia .
