HDFC profit dips marginally on lower income from sale of investments; NPAs rise

The collection efficiency for individual loans on a cumulative basis in June stood at 98.3%, compared to 98% in March.

Housing Development Finance Corporation (HDFC) on Monday reported a 2% year-on-year drop in its net profit for the June quarter to Rs 3,000.67 crore as it earned less from sale of investments. The net interest income (NII) for Q1FY22 stood at Rs 4,147 crore, 22% higher than Rs 3,392 crore in the previous year. The net interest margin (NIM) for the quarter rose 20 basis points (bps) sequentially to 3.7%.

Keki Mistry, vice chairman and chief executive officer, HDFC, said the growth in individual loan disbursements in the first quarter has not been impacted as severely as last year. “While there continues to be uncertainty on the duration of the lockdowns and the possibility of a third wave, we are optimistic of our ability to deliver,” Mistry said.

As of June 30, the assets under management (AUM) stood at Rs 5.74 lakh crore, up 8% from Rs 5.31 lakh crore at the end of the same quarter in the previous year. Individual loans comprised 78% of the AUM. On an AUM basis, the growth in the individual loan book was 14% and growth in the total loan book was 8%.

The company carried provisions worth Rs 13,189 crore as of June 30. As per regulatory norms, the company is required to carry a total provision of Rs 5,778 crore. Of this, Rs 2,443 crore is towards provisioning for standard assets and Rs 3,335 crore is towards non-performing assets (NPAs).

The gross non-performing asset (NPA) ratio increased 26 bps sequentially to 2.24%. The overall collection efficiency ratio for individual loans improved in June to pre-Covid levels, HDFC said in a statement. The collection efficiency for individual loans on a cumulative basis in June stood at 98.3%, compared to 98% in March.

“Individual NPAs increased due to slippages on account of the impact of the second wave of the pandemic. Collection efforts were hindered due to the recovery teams being unable to do field visits during the lockdown period,” the company said, adding that court orders also hampered the collection effort.

Mistry said that so far, HDFC has received requests for one-time restructuring of accounts worth `778 crore, or 0.15% of the loan book.

The capital adequacy ratio (CAR) of the lender stood at 22%, of which tier-I capital was 21.3% and tier-II capital was 0.7%. As per regulatory norms, the minimum requirements for the CAR and tier-I capital are 15% and 10% respectively.

Shares of HDFC ended at Rs 2,462.30 on the BSE on Monday, 0.88% higher than their previous close.