HDFC’s Mortgage Book Actually Growing
HDFC, the largest mortgage lender in India reported second quarter net profits on Friday. The company said that it’s net profit increased by 34.2% excluding onetime gains from the stake sale of BPO firm, Intelenet Global in the same quarter last year. The company’s profit in this quarter, last year was Rs 646.39 Crore (US$ 131 Million), which included a Rs 313.25 Crore (US$ 64 Million) gain from selling its stake in its BPO joint venture with Barclays, to a management buyout financed by the Blackstone Group.
Including onetime gains, HDFC profits actually fell 17.35% year on year, though its income rose 38.47% according to The Business Standard. Interest income rose 36.06%. Contrastingly interest expenses rose 43.06% in the same time frame as well, largely due to the fact that the RBI has been in a tightening cycle for much of this year.
Whilst home loan growth has been moderating for most banks as lenders become reticent to lend in a cycle of tightening and consumers defer purchasing property whilst the real estate market is seeing a modest correction, HDFC’s mortgage portfolio has grown at a torrid 31%. Loan approvals for the half year ending in September grew some 28% whilst actual loan disbursements rose 25% in the same time frame.
HDFC Vice-Chairman and MD Keki Mistry said the company is confident of maintaining a growth of 20-25 per cent for the financial year 2008-09. HDFC said that during the half year-ended September 2008, it improved its spreads to 2.24 per cent from 2.20 per cent in the same period in 2007. A strong recovery effort helped it lower the level of gross non-performing assets to 1.04 per cent of the loan portfolio at the end of September 2008 from 1.16 per cent during the same period last year.
The company said that its deposit base increased almost 28 per cent at the end of September 2008. During the first half of the financial year, deposits accounted for about 45 per cent of HDFC’s borrowing. HDFC’s capital adequacy ratio stood at 15.2 per cent, with Tier I capital adequacy accounting for 14.1 per cent.
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