Healthy loan growth gives good start to HDFC in 2011-12

MUMBAI, JULY 8: 

A healthy growth in loans to individuals and corporate bodies saw Housing Development Finance Corporation Ltd (HDFC) report a 22 per cent increase in net profit in the April-June 2011 quarter. In the reporting quarter, HDFC posted a net profit of Rs 1,176 crore, against Rs 967 crore in the corresponding period last year.

Year-on-year, the loan book of India's biggest housing finance company increased by 22 per cent to Rs 1,24,168 crore as on June-end 2011 (Rs 1,01,625 crore as on June-end 2010). In the reporting quarter, HDFC's loan book nudged up by 6 per cent (or Rs 7,041 crore).

“We have not seen even a marginal slowdown (in demand for home loans). Our loan book grew at 22 per cent. We don't see a slow down yet,” said Mr Deepak Parekh, Chairman, in an interaction with the media after HDFC's annual general meeting.

Referring to the huge shortage in housing and large builders coming up with affordable home projects, Mr Parekh emphasised that the demand for housing was still there.

To a question on demand for home loans getting impacted due to rising interest rates, he said “If interest rates go up by 100- 200 basis points it is not going to impact the demand. But if it increases by 400 -500 bps then we can't tell.”

Deposits rose by 28 per cent year-on-year to Rs 30,500 crore as on June-end 2011, against Rs 23,906 crore as on June-end 2010. The spread on loans over the cost of borrowings for the quarter stood at 2.30 per cent (2.34 per cent).

As on June 30, 2011, the unrealised gains on HDFC's listed investments amounted to Rs 23,206 crore (Rs 21,392 crore as on March-end 2011). This excludes the appreciation in the value of unlisted investments, the company said in a statement.

Gross non-performing loans as at June 30, 2011 amounted to Rs 1,038 crore (Rs 905 crore as of June-end 2010). This is equivalent to 0.83 per cent of the loan portfolio (previous year: 0.98 per cent).

Based on a six months overdue basis, the non-performing loans as at June 30, 2011 stood at 0.55 per cent of the loan portfolio as against 0.54 per cent in the previous year.

HDFC's capital adequacy ratio was lower at 13.8 per cent of the risk weighted assets as of June-end 2011, against 14.8 per cent as of June-end 2010. Tier 1 capital was 12.2 per cent (13.6 per cent).

HDFC's shares closed at Rs 711.95, down 1.49 per cent, on the BSE, on Friday.

Keywords: loan book, Deepak Parekh, capital adequacy ratio, NPAs