DHFL repays Rs 14,000 cr debt, net profit rises 52% in Q2

Dewan Housing Finance Corp Ltd (DHFL) repaid Rs 14,000 crore of debt, sold loans worth Rs 7,400 crore and posted a 52% jump in profit for the quarter ended September that brought a crisis in the non-banking finance companies, triggered by default by systemically important lender IL&FS.

Net profit came in at Rs 439 crore, up from Rs 288 crore in the same quarter of the previous fiscal, DHFL said.

Total income rose 32% to Rs 3,468 crore and gross non-performing assets stood at 0.96%. Net interest margin was at 3.15%.

Kapil Wadhawan, chairman and managing director, DHFL, said in a statement, "Over the past few weeks, the financial services sector, specifically non-banking finance companies, witnessed an unexpected, temporary slump and liquidity tightening. DHFL has taken every step towards mitigating these issues. The company has been diligent towards all its repayments and fulfilled every financial obligation. DHFL immediately reiterated its strong positions on credit quality, credit ratings, no asset-liability mismatch, robust asset quality, strong liquidity and the company's commitment towards all its repayment records."

According to the results announced by the Mumbai-based housing finance company, since September 24, 2018, DHFL has repaid liabilities of nearly Rs 14,000 crore, including over Rs 9,000 crore of commercial paper repayments. This repayment target was met by the company through internal liquidity generation and "minimal external borrowings".

DHFL also said it sold retail housing loans of over Rs 7,400 crore "in a short span of 50 days to eight banks and financial institutions." Names of these eight banks and financial institutions were not immediately made available by the company.

Assets under management (AUM), too, grew by 38% year on year, touching Rs 1,30,182 crore as on September 30, 2018. They stood at Rs 94,079 crore in the corresponding period of last fiscal.

The mortgage lender, however, clarified that it didn't default on any bonds or delayed repayment of any liability. Also, the promoters haven't pledged any shares or availed any loan against share, it said.

NBFC stocks crashed in September, particularly DHFL's shares that were trading at a high of Rs 678.45 per scrip. They fell as much as 55%. The plunge in company's shares was triggered when DSP Mutual Fund, which held DHFL's short-term commercial paper with June maturity, sold it in the market for a substantial discount. This lead to the rumours of a crisis, which affected other housing finance companies as well. The reason behind DSP Mutual Fund's move was to get liquidity into the company because of their exposure in IL&FS.

On Wednesday, DHFL's shares closed at Rs 234.90 per unit on BSE, at almost one-third the level that was seen during early September.

The company's loan book outstanding grew 35% on-year to Rs 1.1 lakh crore at the end of the second quarter. Total loan disbursements increased 39% to Rs 13,870 crore, primarily led by affordable housing segment.

On the subject, Wadhawan said, "During the quarter under review, DHFL maintained robust performance led by loan growth disbursements in the affordable housing segment. Considering that two-thirds of DHFL's home loan portfolio is retail home loans, wherein our average home loan ticket size is below Rs 11 lakh, DHFL has endeavoured to protect margins at 300 to 305 basis points."

One basis point is a hundredth of a percentage point.