HDFC Ltd Q2 profit more than halves to Rs 4,600 cr

"In reality, profit (in Q2 FY21) is higher by as much as 27 per cent compared to last year after you remove dividend income, profit on sale of investments and expected credit loss (ECL) provisions," the company's vice-chairman and CEO Keki Mistry explained. Its dividend income and profit on sale of investments during the quarter stood at Rs 323 crore as against Rs 2,701 crore in the same quarter of the previous fiscal.

Mortgage lender HDFC Ltd's profit after tax declined by more than half to Rs 4,600 crore on a consolidated basis in the quarter ended on September 30, 2020. The company had reported a profit after tax of Rs 10,389 crore in the year-ago quarter. It said during the quarter ended September 30, 2019, Rs 8,000 crore pertained to profit on loss of control of a subsidiary, GRUH Finance. The stake sale of GRUH Finance by the housing finance player was to facilitate the merger of GRUH with Bandhan Bank.

On a standalone basis, its net profit dropped 27.56 per cent to Rs 2,870 crore in the September quarter as against Rs 3,962 crore in the previous year. It provided Rs 662 crore for tax in the reporting quarter. "In reality, profit (in Q2 FY21) is higher by as much as 27 per cent compared to last year after you remove dividend income, profit on sale of investments and expected credit loss (ECL) provisions," the company's vice-chairman and CEO Keki Mistry explained.

Its dividend income and profit on sale of investments during the quarter stood at Rs 323 crore as against Rs 2,701 crore in the same quarter of the previous fiscal. "In accordance with the directions by the Reserve Bank of India (RBI) and Insurance Regulatory and Development Authority, the Corporation has not received any dividend from its investments in banks and insurance companies during the current financial year so far,” it said. Provisioning, including provisioning for the impact of COVID-19, was Rs 436 crore compared to Rs 754 crore in the year-ago quarter. The net interest income (NII) for the quarter ended September 30, 2020, grew 21 per cent to Rs 3,647 crore compared to Rs 3,021 crore in the previous year. Net interest margin for the quarter ended September 30, 2020, stood at 3.3 per cent and for the half-year ended stood at 3.2 per cent.

Gross non-performing loans as of September 30, 2020, stood at Rs 8,511 crore or 1.81 per cent of the loan portfolio. The non-performing loans of the individual portfolio stood at 0.84 per cent while that of the non-individual portfolio stood at 4.19 per cent. "If the Honourable Supreme Court order of maintaining the classification of accounts as status quo till further orders were not to be considered, the non-performing loans would have been only two basis points higher at 1.83 per cent of the loan portfolio; with individual NPLs at 0.88 per cent and non-individuals NPLs at 4.19 per cent," the lender said. The provisions as of September-end stood at Rs 12,304 crore. The provisions carried as a percentage of the Exposure at Default (EAD) is equivalent to 2.60 per cent. The overall collection efficiency for individual loans for the month of September 2020 (the first month after the moratorium) was 96.3 per cent. The collection efficiency for non-moratorium customers stood at 99.5 per cent. During Q2 FY21, individual loan application receipts grew 12 per cent and approvals grew by 9 per cent compared to the corresponding quarter of the previous year. Individual disbursements during the quarter were at 95 per cent levels of the previous year.

"We had a very good quarter in terms of growth. The pick-up in demand that we saw for individual housing loans was a lot faster than what we had originally envisaged," Mistry said. As of September 30, 2020, the assets under management stood at Rs 5,40,270 crore as against Rs 4,90,072 crore in the previous year. As of end September 2020, individual loans comprise 75 per cent of the assets under management (AUM).

The company assigned loans amounting to Rs 3,026 crore to HDFC Bank during the reporting quarter. Its capital adequacy ratio stood at 20.7 per cent, of which tier I capital was 19.5 per cent and tier II capital was 1.2 per cent. As per the regulatory norms, the minimum requirement for the capital adequacy ratio and tier I capital is 14 per cent and 10 per cent respectively.

HDFC shares ended at Rs 2,042.65 apiece, up 6.24 per cent on BSE..