HDFC Q1 net profit drops 4.7% to Rs 3,052 crore on higher provisioning

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Published: July 31, 2020 1:00 AM

The average size of individual loans stood at Rs 24.6 lakh, compared to Rs 27 lakh last year. The lower average loan during the quarter was largely on account of the fact that a number of tier 1 cities were under lockdown.

As on June 30, 2020, the assets under management (AUM) stood at Rs 5.31 lakh crore as against Rs 4.75 lakh crore in the previous year.As on June 30, 2020, the assets under management (AUM) stood at Rs 5.31 lakh crore as against Rs 4.75 lakh crore in the previous year.

Mortgage major Housing Development Finance Corporation (HDFC) on Thursday reported 4.7% drop in net profit to Rs 3,052 crore in the June quarter due to spike in provisions. The total provisions in the quarter stood at Rs 12,285 crore, up 90% year-on-year (y-o-y).

Keki Mistry, vice chairman and chief executive officer, HDFC, said the lender has made Rs 7,833 crore extra provisioning in this quarter as against regulatory requirements. “To my mind we are done with higher provisioning,” Mistry said, adding that he does not see elevated provisioning in the coming quarters.

The loans under moratorium declined to 22.4% in the second phase of the moratorium compared to 27% in the first phase. The individual loans under second phase of moratorium accounted for 16.6% of the individual loan portfolio, HDFC said. This has come down from levels of 22.6% in the first phase of moratorium.

The Reserve Bank of India (RBI) had allowed lenders to grant moratorium relief to borrowers for three months from March 1, in the first phase. The regulator extended moratorium period by three months till August, 2020 in the second phase. Keki Mistry said that only 0.7% of its customers have suffered job losses and 6% customers have got salary cuts. Therefore, the lender is quite hopeful on the recovery of loans.

The net interest income (NII) in the quarter stood at Rs 3,392 crore, up 10% y-o-y. The NII numbers are however, not comparable due to higher liquidity levels and equity investment made in the recent period, as per lender. “After considering the impact, adjusted NII for the quarter ended June stood at Rs 3,609 crore, reflecting a growth of 17% y-o-y,” the lender said.

The net interest margin (NIM) for the quarter came down 20 basis points (bps) to 3.1%, compared to 3.3% in the June quarter last year.

The gross non-performing loans (NPLs) came down by 12 bps to 1.87%, against 1.99% in the March quarter. In absolute terms gross non-performing loans stood at Rs 8,631 crore, compared to Rs 8,908 crore in the previous quarter. Keki Mistry said, “I do not see too much increase in NPLs,” explaining that generally non-performing loans come back to previous levels after the crisis is over.

Total disbursements during the quarter ended June 30, 2020 was 71% of the disbursements in the corresponding quarter of the previous year. Owing to the national lockdown, the retail business was impacted during the quarter, HDFC said. “However, successive month-on-month improvements have been seen in the individual loan business since April 2020, with June 2020 disbursements being 68% of the corresponding month in the previous year,” the lender further said. Keki Mistry said that increasing trend continued in the month of July 2020, without giving exact numbers.

The average size of individual loans stood at Rs 24.6 lakh, compared to Rs 27 lakh last year. The lower average loan during the quarter was largely on account of the fact that a number of tier 1 cities were under lockdown.

As on June 30, 2020, the assets under management (AUM) stood at Rs 5.31 lakh crore as against Rs 4.75 lakh crore in the previous year.

The outstanding deposits increased to Rs 1.43 lakh crore, from Rs 1.32 lakh crore as on March 31, 2020, up 8.3% quarter-on-quarter (q-o-q).

The cost to income ratio stood at 9%, compared to 9.5% in the same quarter last year.

The capital adequacy ratio of the lender remained at 17.3%, against minimum requirement of 14% by the regulator. HDFC has taken shareholders approval to raise Rs 1,400 crore at the annual general meeting held on Thursday.

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