HDFC net rises 2 per cent to Rs 2,106 crore

Mumbai: Pure-play mortgage major HDFC on Monday reported a moderate increase of 2 per cent in its consolidated net profit at Rs 2,106.51 crore for the quarter to September.

Vice-chairman and chief executive Keki Mistry said the bottom line was boosted by a very strong show by the life insurance business. Consolidated profit growth is low despite on a standalone basis the company reported 18 per cent growth in profit and all the subsidiaries reported a healthy numbers.

Net profit of the life insurance business stood at Rs215.34 crore from Rs 183.74 crore. Profit in the general insurance was Rs 60.52 crore from Rs 36.27 crore.

The asset management subsidiary booked a profit of Rs172.52 crore from Rs 165.94 crore. On standalone basis, net profit rose 18 per cent to Rs1,605 crore, primarily boosted by dividend from its banking subsidiary HDFC Bank, Mistry said.

The mortgage player provided Rs 719 crore of tax, which included Rs 83 crore as deferred tax liability on special reserves. The net interest margin in the quarter stood at 3.95 percent as against 4 per cent in the year-ago quarter.

"There is marginal decline in net interest margin despite the fact that the spread has widen compared to the previous year. The reason for this is the interest rate that is prevailing in the system," he said.

The spread on loans over the cost of borrowing for the half year, stood at 2.32 per cent compared to 2.29 per cent in the year-ago period. The net interest income, including dividend, was Rs2,501 crore, an increase of 21 per cent from Rs 2,059 crore last year same period crore.

"The growth in NII has come from the fact that in the quarter we received dividend from HDFC Bank," Mistry said.

Gross non-performing loans stood at 0.71 per cent. The non-performing loans of the individual portfolio stood at 0.53 per cent while that of the non-individual portfolio stood at 1.12 per cent.

The loan book stood at Rs 2,37,991 crore from Rs2,12,344 crore last year. It sold Rs 12,969 crore of loans in the preceding 12 months. Its total loans outstanding stood at Rs 29,125 crore on which it got a weighted average return of 1.22 per cent.

Its capital adequacy ratio after reducing the investment in HDFC Bank from tier I capital stood at 16.1 per cent, of which tier I capital was 12.8 per cent and tier II capital was 3.3 per cent.

It received board approval for a level 1 American depository receipts (ADRs) programme in respect of up to 10 per cent of the issued and paid up share capital of the corporation.

"The programme envisages conversion of existing equity shares of the corporation into ADRs and does not entail any issue of additional shares," Mistry said.

It also received shareholders nod to issue rupee denominated bonds overseas up to USD 750 million. In August, the company had agreed to sell 9 per cent of equity shares in HDFC Life to Standard Life subject to regulatory approvals.

For that 9 per cent the application has been made to FIPB recently and also IRDA has come out with some changes that are required in the shareholders agreement, which is being worked on, Mistry said.

"Once this transaction is complete, we will look at the IPO. Therefore, an IPO will not happen in 2015 for sure but somewhere in the middle of 2016," he said.

Commenting on the numbers, Vaibhav Agrawal of Angel Broking said the company's numbers are good despite sluggish economic environment. Overall, we expect HDFC to post a healthy CAGR of 15.3 per cent over FY2015-17.

The HDFC counter ended at 2.09 per cent down at Rs1,312.85, on the BSE which closed at 27,361.96, down 0.40 percent.