Zee Business Exclusive Interview with HDFC VC & CEO Keki Mistry: Not much impact economically after interest hike

Zee Business interview: Housing Development Finance Corporation's VC and CEO Keki Mistry in an exclusive interview with Zee Business Executive Editor, Swati Khandelwal, said that the September quarter was good for the company. 

“This quarter was very good for us, the momentum that came for housing which started coming in October 2020 kept on mounting,” Keki Mistry said.

He added that this quarter saw strong demand from tier one cities, “In the three years from 2017-19, tier one cities like Mumbai, Delhi, Bangalore have seen a slowdown of demand, while tier two and tier three cities had strong demand. Post-2020, we are seeing momentum in tier one cities, while the demand in tier two and three cities continue to grow at the same pace.”

In the interview, Mistry stated that HDFC saw a better collection efficiency than previously in the September quarter. “Our average loan size last year was Rs 31.3 lakhs, and this year it is Rs 35.7 lakhs. This quarter saw better collection efficiency than it used to. This quarter recorded 99 per cent cumulative collection efficiency in individual loans,” he added.

He further said that the Net interest margin for this quarter was 3.4 per cent and the net interest income growth was about 13 per cent, if not considering the one and the half month transmission lag where rates change in the system and that change impacts the lending rate, then the Net interest growth could have been 16 per cent.

Mistry shared that there is a sentimental effect on the customer when there is a hike in interest rate but economically there is not much impact as lenders provide floating rate loans and not fixed rate loans. 

India's largest mortgage lender HDFC on Thursday reported an 18 per cent growth in net income to Rs 4,454 crore in the September quarter, mainly driven by higher retail loan sales that hit an eight-year high of 36 per cent.

On a consolidated basis, the corporation reported a higher 24 per cent jump in net income to Rs 7,043 crore from Rs 5,670 crore. However, the profit from the sale of investments declined to Rs 184 crore from Rs 263 crore.

HDFC's total standalone income rose to Rs 15,036 crore from Rs 12,226 crore in the same quarter last year. 

At a collection efficiency of over 99 per cent, HDFC reported a major improvement in the asset quality with the net NPA under the new RBI norms coming down to 0.91 per cent from 1.44 per cent, overall NPAs came down by 56 bps to 1.44 per cent.

The company is carrying higher provisioning of Rs 13,146 crore against Rs 9,355 crore needed.

During the quarter, the corporation assigned loans worth Rs 9,145 crore to HDFC Bank up from Rs 7,132 crore, and loans sold in the preceding 12 months amounted to Rs 34,513 crore, up from Rs 27,199 crore. Outstanding retail loans sold stood at Rs 93,566 crore.