HDFC Q4FY19 PAT rises 27% to Rs 2,862 crore; individual loans robust

Housing Development Finance Corporation (HDFC) posted a 27% rise in its net profit during March 2019 (Q4FY19) quarter to Rs 2,862 crore compared to Rs 2,257 crore in the corresponding period of previous year. Meanwhile, during the quarter, net interest income (NII) came in at Rs 3,161 crore resulting in a growth of 19% from Rs 2,650 crore a year ago same period. That said, net interest margin stood at 3.3%. 

Interestingly, the HDFC stated that the profit numbers for the year March 2019 is not comparable with that of previous fiscal FY18. That is because HDFC has sold shares in its initial public offer of HDFC Life Insurance, which triggered the provision of Minimum Alternate Tax (MAT) resulting in lower tax in the previous year. 

For FY19, the reported PAT stood at Rs 9,633 crore as against Rs 10,959 crore in the previous year. To reiterate, the higher profit in the previous year was on account of profit of Rs 5,265 crore on sale of its stake in HDFC Life. On the other hand, NII surged by 18% to Rs 11,403 crore in FY19 compared to Rs 9,635 crore a year ago. 

Moving further, HDFC’s individual loan disbursement rose by 15%. The company’s average size of individual loans stood at Rs 27 lakh.  On Asset Under Management (AUM) front, HDFC recorded a growth of 17% in individual loan book alone, while the overall growth was 15% in total loan book. Till FY19 end, individual loans have now comprised 74% of HDFC’s AUM. 

HDFC said, “The lower growth in the loan book was due to the unfavourable lending environment for non-individual loans that prevailed in the second half of the financial year. Tight liquidity conditions, over leverage and credit rating downgrades led to heightened risks across corporate sector. In order to preserve asset quality, the corporation opted to be prudent by curtailing some of its lending to non-individual loans.”

Further, HDFCs gross NPA was at Rs 4,777 crore as on March 2019, as per National Housing Bank norms. This is equivalent to 1.18% of the loan portfolio. As per the financial audit report, the company’s non-performing loans (NPL) was higher at 2.34% in non-individual loans compared to just 0.70% in individual portfolio.

Additionally, during the year end FY19, HDFC did 37% of home loans approved in volume terms and 18% in value terms to customers  from economically weaker section (EWS) and low income groups (LIG). On an average basis, HDFC has been approving 8,600 loans on a monthly basis to EWS and LIG segment. That would be worth Rs 1,406 crore monthly.  Average home loans to EWS and LIG would be at an amount of Rs 10.1 lakh and Rs 17.5 lakh. 

As on March 2019, HDFC’s unaccounted gains on listed investments in subsidiary and associate companies aggregated up to Rs 1,87,386 crore. 

The share price of HDFC was trading at Rs 1,968.65 per piece up by Rs 37.50 or 1.94% on Sensex at around 1349 hours.