HDFC net soars 61% on Gruh stake sale, lower tax

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Published: November 5, 2019 12:41:42 AM

The asset quality of HDFC marginally deteriorated as gross NPAs as a percentage of loans outstanding stood at 1.33%, compared to 1.29% in the previous quarter.

Chairman Deepak Parekh, hdfcChairman Deepak Parekh

Mortgage major Housing Development Finance Corporation (HDFC) on Monday reported a standalone net profit of Rs 3,962 crore, a 61% rise year-on-year, led by Gruh Finance stake sale and lower tax expenses. Dividend from HDFC Bank and Gruh Finance totalling Rs 1,073.8 crore was received in the second quarter of FY20, leading to a large year-on-year spike in its dividend income from Rs 5.77 crore. The reported net profit of the company beat analysts’ estimate of Rs 3,264.8 crore compiled by Bloomberg.

Speaking to Financial Express post earnings announcement, HDFC vice-chairman & CEO Keki Mistry said, “The numbers were aided by new tax regime and Gruh Finance stake sale. The demand for individual housing loans continues to be strong and average loan amount came down to Rs 26,60,000 from Rs 27,00,000 in the last quarter.” Profit on sale of investments came in at `1,627.09 crore, an 82.5% rise compared to the previous year, led by sale of stake in Gruh Finance. The lower tax expense at Rs 568.85 crore, against Rs 1,022 crore a year ago, also boosted the profit.

The company earned a net interest income — the difference between interest earned and interest expended — of `3,021 crore in the quarter, a growth of 17% compared to the year-ago period. Net interest margin, remained unchanged at 3.3% for the half year ended September. The total income came in at Rs 13,494.12 crore and registered a 19.87% year-on-year rise.

The asset quality of HDFC marginally deteriorated as gross NPAs as a percentage of loans outstanding stood at 1.33%, compared to 1.29% in the previous quarter. The gross non-performing loans were at Rs 5,655 crore this quarter, compared with Rs 5,315 crore in the last quarter. Non-performing loans in the individual portfolio stood at 0.73% while that in the non-individual portfolio stood at 2.87%.

HDFC’s provisions as on September 30, 2019, stood at Rs 7,313 crore, or 1.72% of the exposure at default (EAD), which is significantly higher than the mandated requirement. The provisions in the last quarter stood at Rs 6,470 crore. The loan book registered a growth of 12% and stood at Rs 4.26 lakh crore. Total individual disbursements grew by 12%.

“Given the prolonged uncertainty and risk averseness in the lending environment for non-individual loans, the corporation continued to be prudent by curtailing some of its lending to the non-individual segment,” the company said.

Following the earnings announcement, the scrip closed at Rs 2,181.35, a 2.48% rise from the previous close.

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