- 18% growth in the overall loan book on an Assets Under Management (AUM) basis as at September 30, 2017
- 15% growth in Net Interest Income for the half year ended September 30, 2017
- Net interest margin at 3.9% per annum, spread on loans at 2.29% per annum
- 15% and 17% growth in standalone and consolidated Profit After Tax for the quarter ended September 30, 2017
The Board of Directors of Housing Development Finance Corporation Limited (HDFC) announced its unaudited standalone and consolidated financial results for the first half of the financial year 2017-18, following its meeting on Monday, October 30, 2017 in Mumbai. The accounts have been subjected to a limited review by the Corporation’s statutory auditors in line with the regulatory guidelines.
STANDALONE FINANCIAL RESULTS Financials for the quarter ended September 30, 2017 For the quarter ended September 30, 2017, the profit after tax stood at Rs 2,101 crore as compared to Rs 1,827 crore in the corresponding quarter of the previous year, representing a growth of 15%. This is after providing Rs 806 crore for tax (Previous year: Rs 731 crore).
Financials for the half-year ended September 30, 2017 The profit numbers for the half-year ended September 30, 2017 are not comparable with that of the half-year ended September 30, 2016. In June 2016, the Corporation sold shares of HDFC ERGO General Insurance Company to ERGO International AG, a subsidiary of Munich Re for a consideration of Rs 920 crore and had also created a one-time special provision of Rs 275 crore as a charge to the statement of profit and loss. The reported profit before tax for the half-year ended September 30, 2017 stood at Rs 5,266 crore compared to Rs 5,257 crore in the corresponding period of the previous year. After considering the above-mentioned one-time transaction, the adjusted profit before tax for the half-year ended September 30, 2016 stood at Rs 4,612 crore. The profit before tax for the half-year ended September 30, 2017 stood at Rs 5,266 crore, representing a growth of 14% over the corresponding period last year. After providing Rs 1,609 crore for tax, (inclusive of Rs 213 crore as deferred tax liability on Special Reserve), the reported profit after tax stood at Rs 3,657 crore as compared to Rs 3,697 crore in the previous year.
LENDING OPERATIONS Individual loan disbursements grew by 23% during the half-year ended September 30, 2017. The average size of individual loans stood at Rs 23.6 lac. On an Assets under Management (AUM) basis, the growth in the individual loan book was 16% and the non-individual loan book was 24%. The growth in the total loan book was 18%. As at September 30, 2017, individual loans comprise 72% of the AUM. 70% of incremental loans came from individual loans and 30% from Commercial Lease Rental Discounting and Construction Finance. As at September 30, 2017, the loan book stood at Rs 3,24,077 crore as against Rs 2,75,406 crore in the previous year. The Corporation, sold individual loans amounting to Rs 3,530 crore in the quarter ending September 30, 2017. Of this, Rs 3,165 crore was assigned to HDFC Bank pursuant to the buyback option embedded in the home loan arrangement between the Corporation and HDFC Bank and Rs 365 crore was assigned to another bank. In respect of the loans assigned to the other bank, the residual income is 2.4% per annum. As at September 30, 2017, the outstanding amount in respect of individual loans sold was Rs 43,435 crore. HDFC continues to service these loans and is entitled to the residual income on the loans sold. The residual income on the individual loans sold stood at 1.27% per annum and is being recognised over the life of the loans and not on an upfront basis. Total loans sold during the preceding twelve months was Rs 15,433 crore as against Rs 13,086 crore in the previous year. The growth in the individual loan book, after adding back loans sold in the preceding 12 months was 23% (15% net of loans sold). The non-individual loan book grew at 23%. The growth in the total loan book after adding back loans sold was 23% (18% net of loans sold).
Non-Performing Loans (NPL)Gross non-performing loans as at September 30, 2017 stood at Rs 3,701 crore. This is equivalent to 1.14% of the loan portfolio. The non-performing loans of the individual portfolio stood at 0.65% while that of the non-individual portfolio stood at 2.18%. In August 2017, the National Housing Bank (NHB) had reduced standard asset provisioning on total outstanding individual housing loans to 25 basis points compared to 40 basis points earlier. As per NHB norms, the Corporation is required to carry a total provision of Rs 2,500 crore of which Rs 1,446 crore is against standard assets and Rs 1,054 crore is towards regulatory provisioning for non-performing assets. As against this, the balance in the Provision and Contingencies Account as of September 30, 2017 amounted to Rs 3,235 crore. This is equivalent to 0.99% of the loan portfolio.
Spread, Net Interest Income & Margin The spread on loans over the cost of borrowings for the half-year ended September 30, 2017 stood at 2.29% compared to 2.28% for the half-year ended September 30, 2016. The spread on the individual loan book was 1.92% and on the non-individual book was 3.07%. The net interest income for the half-year ended September 30, 2017 stood at Rs 5,199 crore compared to Rs 4,530 crore in the corresponding period of the previous year, representing a growth of 15%. Net Interest Margin for the half-year ended September 30, 2017 was 3.9%, the same as in the corresponding period of the previous year.
INVESTMENTS As at September 30, 2017, the unrealised gains on HDFC’s listed investments amounted to Rs 1,03,068 crore (previous year Rs 70,641 crore). This excludes the appreciation in the value of unlisted investments.
CAPITAL ADEQUACY RATIO The Corporation’s capital adequacy ratio stood at 15.1%, of which Tier I capital was 12.6% and Tier II capital was 2.5%. Deferred tax liability on Special Reserve and the investment in HDFC Bank has been considered as a deduction in the computation of Tier I capital. As per the regulatory norms, the minimum requirement for the capital adequacy ratio and Tier I capital is 12% and 6% respectively.
CONSOLIDATED FINANCIAL RESULTS For the quarter ended September 30, 2017, the consolidated profit after tax at Rs 2,869 crore as compared to Rs 2,446 crore in the corresponding period last year, representing a growth of 17%. For the half-year ended September 30, 2017, the consolidated profit after tax stood at Rs 5,603 crore as compared to Rs 5,243 crore in the corresponding period last year, representing a growth of 7%. The share of profit from subsidiary and associate companies in the consolidated profit after tax stood at 35% for the half-year ended September 30, 2017 compared to 29% in the corresponding period of the previous year.
DISTRIBUTION NETWORK HDFC’s distribution network spans 439 outlets which include 135 offices of HDFC’s distribution company, HDFC Sales Private Limited (HSPL). HDFC covers additional locations through its outreach programmes. Distribution channels form an integral part of the distribution network with home loans being distributed through HSPL, HDFC Bank Limited and third party direct selling associates. To cater to non-resident Indians, HDFC has offices in London, Dubai and Singapore and service associates in Kuwait, Oman and Saudi Arabia.
