Home buyers, dividend income inflate HDFC profit

Housing Development Finance Corporation (HDFC) reported a 54% jump in its net profit to Rs 2,190 crore for the first quarter ended June 30, 2018, on the back of dividend income of Rs 558 crore from HDFC Bank, stable asset quality and strong growth in advances.

In the previous year, a dividend from HDFC Bank was received in the second quarter.

The 54% rise in net profit is mainly on account of the dividend income and migration to the Indian Accounting Standard from April 1, 2018, which requires notional valuation of stock options. Without these two items, the rise in the net profit of the corporation would have been at 21%. The dividend income usually comes in the second quarter.

Keki Mistry, vice chairman and chief executive officer, HDFC, told DNA Money, "The dividend income of Rs 558 crore and the migration to Indian Accounting Standard mandates us to undertake a notional valuation of the stock options which was Rs 195 crore this quarter as against Rs 95 crore in the same quarter last year. The growth in advances was also healthy but there are always some pockets which may not grow at a healthy pace."

The company's Board also approved raising $1.5 billion or Rs 10,200 crore in external commercial borrowing and issuing debentures worth Rs 35,000 crore to meet the funding requirements.

The growth in the individual loan book was 25%. The non-individual loan book grew 18%. The growth in the total loan book was 23%. The average ticket size of individual loans stood at Rs 26.7 lakh. At the end of the quarter, the individual loans comprise 72% of the assets under management. The total loan book was at Rs 3,71,988 crore as against Rs 3,13,573 crore a year ago.

HDFC's total standalone income for the quarter increased 20% to Rs 9,952 crore from Rs 8,289.98 crore a year ago. The revenue from operations increased to Rs 9,883.64 crore, as against Rs 8,259.77 crore in the year-ago period. The net interest income rose 20% to Rs 2,890 crore.

Lalitabh Shrivastawa, AVP – research, Sharekhan by BNP Paribas, said, "HDFC Ltd continues to show its class and consistency by maintaining its strong operating metrics over time and rate cycles. Q1FY19 saw strong loan growth and stable spreads as positives offsetting minor blip in asset quality. HDFC continues to hold an attractive bouquet of associates that are strong businesses and add value to the parent.

The net interest margin (NIM) stood at a robust 3.5%. It maintained a stable asset quality with gross non-performing loans at Rs 4,409 crore as on June 30, 2018, which is 1.18% of the loan portfolio. 

Delinquencies of the retail borrowers were better with non-performing loans of the individual portfolio at 0.66% of the total advances while that of the non-individual portfolio at 2.32% of total advances.

HDFC shares closed at Rs 2,028.05 apiece on BSE, down 0.80%. During the day, the stock fell as much as 1.55% to Rs 2,012.70 per share.