HDFC profit surges 43% to ₹3,180 cr in Q4
MUMBAI: Housing Development Finance Corp. (HDFC) plans to raise as much as $17 billion in bonds after India’s largest mortgage financier posted a betterthan-expected rise in fourthquarter profit.
The Mumbai-based shadow lender’s fourth-quarter net income rose 43% to ₹3,180 crore ($432 million) as it set aside fewer provisions for bad loans, it said in a statement on Friday. That beat an average estimate of ₹2,920 crore of 11 analysts surveyed by Bloomberg.
While the coronavirus has impacted HDFC less than its peers, India’s shadow lending sector has been significantly weakened since 2018 with the failure of a large infrastructure financier.
A second deadly coronavirus wave has also led to local lockdowns, hurting businesses and jobs. The Reserve Bank o India announced a new round of measures this week to help lenders and businesses through the surge in infections.
Shares in HDFC rose 2.4% after the earnings announcement, outpacing a 0.22% rise in the main banking gauge.
The 30-share BSE Sensex climbed 256.71 points or 0.52% to finish at 49,206.47.
HDFC’S board approved a plan to raise as much as ₹1.25 lakh crore of bonds in the current financial year, it said.
The company has ₹21,740 crore of bonds maturing this year, according to data compiled by Bloomberg.
“This is the best time to keep some extra headroom to borrow
HDFC’S BOARD APPROVED A PLAN TO RAISE AS MUCH AS ₹1.25 LAKH CRORE OF BONDS IN THE CURRENT FINANCIAL YEAR
more from debt capital markets given the low interest rate regime,” said Ajay Manglunia, managing director and head of institutional fixed income at JM Financial Ltd.
“In these days, when one doesn’t know how long the coronavirus wave will go on, it is good to have adequate capital to meet maturity payments, growth and any sudden requirements,” he said.
Interest income fell slightly to ₹10,450 crore from ₹10,960 crore a year ago.
HDFC set aside ₹720 crore in provisions for impairments, compared with ₹1,270 crore a year earlier.
Lenders have been reducing bad loan buffers after setting aside significantly large pots of money a year ago to boost profitability and provide for lower interest earnings.
The company said it restructured loans worth ₹4,479 crore under the RBI’S resolution framework for Covid-19 related stress. Of the loans being restructured, 27% are individual loans and 73% non-individual loans.
“At this juncture, there continues to be a great deal of uncertainty on the duration and intensity of the second Covid-19 wave and the resultant impact it may have on the corporation and the overall economy,” the company said in the statement.