HDFC net soars almost four times on gains from Gruh Finance merger

The largest pureplay mortgage lender HDFC on Monday reported a near four-fold growth in net profit at Rs 8,372.5 crore for the three months to December as against Rs 2,113.8 crore in the same period last year. The company said the massive gain in bottomline is notional but mandatory from an accounting perspective, as it is based on the valuation gain on its 9.9 per cent stake in Bandhan Bank following the merger of subsidiary Gruh Finance with the Kolkata-based lender effective last October.

It can be noted that in October, HDFC had allotted 9.90 per cent of its subsidiary Gruh Finance to Bandhan Bank, the value of which is pegged at Rs 9,020 crore at the end of the reporting quarter. The reported profit-before-tax for the quarter ended December 31, 2019 stood at Rs 9,143 crore compared to Rs 2,869 crore in the previous year and after providing for tax of Rs 771 crore, profit after tax is Rs 8,372.5 crore compared to Rs 2,113.8 crore, the company explained.

For the first time, the loan book crossed Rs 5 lakh crore during the quarter, vice chairman and chief executive Keki Mistry told reporters here this evening. The company booked a 24 per cent growth in individual loans, after adding back loans sold in the preceding 12 months, while excluding that the same clipped at 16 per cent.

On an AUM basis, growth in the individual loan book was 16 per cent while total loan book grew 14 per cent. Net interest margin, which is the key profit metric, remained flat at 3.3 per cent during the reporting quarter as in the past two quarters, and the same from individual loans stood 1.97 per cent. The spreads stood at 2.27 per cent.

Despite a negative market and the rising gloom on the overall economy, gross non-performing loans stood at Rs 5,950 crore or 1.36 per cent, while NPAs on the individual portfolio stood at 0.75 per cent, up 2 bps from Q2 and that of the non-individual portfolio at 2.91 per cent, Mistry said. HDFC's capital adequacy ratio stood at higher 18.6 per cent, of which tier I was 17.3 per cent and tier II was 1.3 per cent as against the regulatory requirement of 13 per cent.

As of December 2019, individual loans comprised 76 per cent of the loan book, while if looked from a nine months perspective, the same accounted for 90 per cent of the incremental loan growth taking the total outstanding individual loans to Rs 63,679 crore. The corporation on average has been approving 9,400 affordable housing loans on a monthly basis, with monthly such average approvals at Rs 1,500 crore. Total individual loan approvals grew 15 per cent and disbursements grew by 13 per cent. The average size of individual loans has come down to Rs 26.9 lakh from over Rs 27.2 lakh.

As against the mandated provision of Rs 3,624 crore, the company made a provision of Rs 9,934 crore or 2.25 per cent of total loans. The HDFC counter closed 2.25 per cent down at Rs 2395.80 on the BSE whose benchmark Sensex plunged by a whopping 1.1 per cent.

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