HDFC profit up 15% in Q2

Aided by healthy growth in loans, sta­ble mar­gins

The Hindu Business Line - - BANKING -

HDFC re­ported a 15 per cent in­crease in sec­ond quar­ter stand­alone net profit at ₹2,101 crore against ₹1,827 crore in the year­ago quar­ter. This comes on the back of healthy growth in loans and sta­ble spreads.

Net in­ter­est mar­gin (the dif­fer­ence be­tween in­ter­est earned and in­ter­est ex­pended) in the re­port­ing quar­ter was up 14 per cent year-on-year at ₹2,612 crore.

“In­di­vid­ual loan dis­burse­ment grew 23 per cent, which on a base as large as ours is a very sub­stan­tial in­crease. To­tal loan book growth was 18 per cent,” said ViceChair­man and Chief Ex­ec­u­tive Keki Mistry.

Loan book, on as­sets un­der man­age­ment (AUM) ba­sis, as of Septem­ber-end 2017 stood at ₹3.68 lakh crore, an in­crease of 18 per cent over the pre­vi­ous year.

Dur­ing the quar­ter, HDFC sold loans ag­gre­gat­ing ₹3,530 crore (of which ₹3,165 crore was to HDFC Bank and ₹365 crore to other banks).

“.…We do not re­tain all the loans that we orig­i­nate. We also sell down loans. In the last 12 months, we sold loans ag­gre­gat­ing ₹15,433 crore,” said Mistry.

At 3.9 per cent, net in­ter­est mar­gin has been sta­ble right through, Mistry said, and added that in the June quar­ter, it was 3.9 per cent and in the Septem­ber quar­ter too, it con­tin­ued to stand at 3.9 per cent.

Spreads as of Septem­ber-end 2017 stood at 2.29 per cent (2.28 per cent in the Septem­ber 2016 quar­ter).

The un­recog­nised profit of HDFC’s listed in­vest­ments (HDFC Bank and Gruh Fi­nance) was ₹1.03 lakh crore. In ad­di­tion to this, Mistry said it has un­recog­nised profit from un­listed in­vest­ments.

“Based on this un­recog­nised profit, if we were to re­cal­cu­late the book value per share then the ad­justed book value af­ter tak­ing into ac­count the un­re­alised gain would be ₹902 per share,” he said.

NPAs stood at 1.14 per cent (com­pared to 1.12 per cent in June quar­ter). On Septem­ber 30, HDFC car­ried a to­tal bal­ance sheet pro­vi­sion of ₹3,235 crore against reg­u­la­tory re­quire­ment of ₹2,500 crore.

“His­tor­i­cally, we have al­ways cre­ated a buf­fer in the pro­vi­sion by trans­fer­ring 30 per cent of the prof­its that we get from sell­ing of in­vest­ments in sub­sidiaries.

“…In the De­cem­ber 2017 quar­ter, out of the prof­its that we will re­alise on the list­ing of HDFC Stan­dard Life, a pro­por­tion of those prof­its we will put into a spe­cial pro­vi­sion,” ex­plained Mistry.

In the re­port­ing quar­ter, HDFC’s con­sol­i­dated net profit (af­ter tak­ing into ac­count its share of profit from, among oth­ers, HDFC Bank, HDFC Stan­dard Life, HDFC ERGO and HDFC AMC) was up 17 per cent at ₹2,869 crore.

ZY KEKI MISTRY Vice-Chair­man & Chief Ex­ec­u­tive, HDFC YZ

In­di­vid­ual loan dis­burse­ment grew 23 per cent, which on a base as large as ours is a very sub­stan­tial in­crease

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