HDFC profit rises 18% in Q2, asset quality improves | The Financial Express

HDFC profit rises 18% in Q2, asset quality improves

The numbers came in ahead of the Bloomberg estimate of Rs 4,277 crore.

HDFC profit rises 18% in Q2, asset quality improves
HDFC’s AUMs grew 15.6% YoY and 2.8% sequentially.

Mortage lender Housing Development Finance Corporation (HDFC) on Thursday reported a good set of numbers for the September quarter, posting a 17.8% year-on-year rise in its net profits to Rs 4,454.24 crore. The numbers came in ahead of the Bloomberg estimate of Rs 4,277 crore. The HDFC stock ended Thursday’s session at Rs 2,478, 1.17% lower than Wednesday’s close.

Keki Mistry, vice chairman and CEO, observed that higher rates are unlikely to make a difference to demand since home loans are typically for 15 years. “We have seen many cycles and since the rates are floating rate loans, they will move up and down,” he explained. “My sense is that demand will continue.” The lender’s net interest income grew 12.9% to Rs 4,639 crore. The net interest margin (NIM) for the half-year ended September 30 was 3.4%, the lender said in a release.

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Mistry observed that each time rates rise, the loan rates get revised after three months, whereas borrowing costs go up immediately. “The increase in rates in the quarter will see benefits later. In a rising interest rate scenario, there is a lag of one-and-a-half months, which results in a 10-12 bps compression in margins,” Mistry said.

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The lender has increased its benchmark lending rates. Moreover, the lender has shifted incremental disbursements of individual loans from a quarterly reset to a monthly reset “to reduce the impact of transmission of rate changes”. The spreads for the reporting quarter came in at 2.28%, compared with 2.25% in the June quarter.

HDFC’s AUMs grew 15.6% YoY and 2.8% sequentially. Construction finance loans now comprise 9% of the portfolio. The asset quality improved, with gross NPAs coming in at 1.59%, down from 1.78% in Q1. The improvement was seen both in the non-individual and individual loan categories – in the former category, NPAs fell from 4.44% to 3.9% sequentially. Mistry said depositors of HDFC will continue to enjoy the same rate of interest, at which the deposit was created, even after the merger with HDFC Bank.

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First published on: 04-11-2022 at 07:16 IST