Low delin­quen­cies, steady growth in re­tail loans

Good show con­tin­ues de­spite mod­er­a­tion in bank credit growth to the hous­ing seg­ment

The Hindu Business Line - - BANKING - RADHIKA MERWIN

Healthy growth in re­tail loans, sta­ble mar­gins, and steady as­set qual­ity sum up the Septem­ber quar­ter re­sults for mar­ket leader Hous­ing De­vel­op­ment Fi­nance Cor­po­ra­tion (HDFC).

The lender con­tin­ued to put up a good show de­spite the mod­er­a­tion in bank credit growth to the hous­ing seg­ment in re­cent times.

Re­tail loans (in­clud­ing sale of loans to HDFC Bank) have grown 23 per cent in the lat­est Septem­ber quar­ter, de­spite the head­winds in the prop­erty mar­ket. The strong de­mand from the mid-in­come group has kept growth steady.

Non-re­tail inches up

Aside from the healthy growth in re­tail loans, HDFC’s non-re­tail seg­ment too has been pick­ing up in re­cent quar­ters. The growth has been led by lease rental dis­count­ing — loan against fu­ture rental re­ceipts from lease con­tracts with cor­po­rate ten­ants. The growth in non-re­tail loans, which inched up to 17 per cent in the De­cem­ber and March quar­ters, scaled up to 22 per cent in the June quar­ter. In the lat­est Septem­ber quar­ter, growth moved up a tad to 23 per cent.

HDFC’s abil­ity to main­tain low level of delin­quen­cies over the years has been a key pos­i­tive. The gross non-per­form­ing as­sets (GNPA) in the Septem­ber quar­ter went up marginally to 1.14 per cent of loans from 1.12 per cent in the June quar­ter.

Com­pe­ti­tion in the hous­ing fi­nance in­dus­try has been in­ten­si­fy­ing over the past two to three years. Aside from es­tab­lished hous­ing fi­nance com­pa­nies and NFBCs, com­mer­cial banks, too, want a piece of the ac­tion, given their lack­lus­tre growth in cor­po­rate lend­ing and the fact that hous­ing fi­nance of­fers a low risk, con­sis­tent growth al­ter­na­tive.

Over the past one to two years, lend­ing in­sti­tu­tions have cut home loan rates by 1-1.2 percentage points. De­spite the lower yield on loans, HDFC has man­aged to hold its spread (re­turn on loans less cost of bor­row­ings) steady.

In the Septem­ber quar­ter, the com­pany’s spread on loans stood at 2.29 per cent, sim­i­lar to the lev­els seen in the pre­vi­ous quar­ter and marginally higher than that in the same quar­ter of the pre­vi­ous year.

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