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Housing Development Finance Corporation

3 Nov 2022 , 10:37 PM

HDFC has posted 18% increase in the net profit to Rs 4454.24 crore on standalone basis in the quarter ended September 2022 (Q2FY2023). The net interest income of the company increased at improved pace of 15%, while the net interest margin was steady at 3.4% in Q2FY2023. The profit before tax jumped 16% to Rs 5414.06 crore in Q2FY2023 compared to Rs 4671.07 crore in Q2FY2022, driven by moderate 5% rise provisions to Rs 473 crore in Q2FY2023. The cost to income ratio eased on sequential basis 9.1% in Q2FY2023 from 10.7% in the previous quarter, while also declined from 9.4% in Q2FY2022. The loan growth of the company eased to 14% end September 2022 from 16% end June 2022 and remained steady from 14% end March 2022. Overall lending operations The assets under management stood at Rs 690284 crore end September 2022 as against Rs 597339 crore end September 2021, recording healthy growth of 16%. Individual loans comprise 81% of the Assets Under Management (AUM). On an AUM basis, the growth in the individual loan book was 20% and growth in the total loan book on an AUM basis was 16%. During the six months ended September 30 2022 the average size of individual loans stood at Rs 35.7 lakh compared to Rs 33.1 lakh in FY22. During Q2FY2023 the Corporation assigned loans amounting to Rs 9145 crore (PY: Rs 7132 crore) to HDFC Bank. Loans sold in the preceding 12 months amounted to Rs 34513 crore (PY: Rs 27199 crore). As at September 30 2022 the outstanding amount in respect of individual loans sold was Rs 93566 crore. HDFC continues to service these loans. The growth in the individual loan book, after adding back loans sold in the preceding 12 months was 28%. The growth in the total loan book after adding back loans sold was 21%. During H1FY2023 individual approvals and disbursements grew by 35% and 36% respectively compared to the corresponding period in the previous year. The demand for home loans continues to remain strong. Growth in home loans was seen in both, the mid-income segment as well as high end properties. During H1FY2023, 92% of new loan applications were received through digital channels. Collection efficiency, non-performing assets & provisioning The collection efficiency for individual loans on a cumulative basis stood at over 99% during Q2FY2023. The gross individual non-performing loans (NPLs) stood at 0.91% of the individual portfolio, while the gross non-performing non-individual loans stood at 3.99% of the non-individual portfolio. The gross NPLs stood at Rs 9355 crore. This is equivalent to 1.59% of the portfolio end September 2022. The company carried a total provision of Rs 13146 crore. The provisions carried as a percentage of the Exposure at Default (EAD) is equivalent to 2.21%. The Expected Credit Loss (ECL) charged to the Statement of Profit and Loss for H1FY2023 was lower at Rs 987 crore (PY: Rs 1138 crore). Annualised credit costs for Q2FY2023 stood at 29 basis points. Credit costs for H1FY2023 stood at 31 basis points (PY: 40 basis points). Net interest income The monetary policy and interest rate actions have had a short-term impact on the net interest income (NII) and to a lesser extent on the net interest margin (NIM). The NII for Q2FY2023 stood at Rs 4639 crore compared to Rs 4110 crore in the previous year, registering a growth of 13%. The company has increased its benchmark lending rates and has incrementally shifted from a quarterly reset for individual loans to a monthly reset to reduce the impact of transmission of rate changes. Spreads and net interest margin The reported NIM for H1FY2023 was 3.4%. The spread on loans over the cost of borrowings for H1FY2023 was 2.28%. The spread on the individual loan book was 1.91% and on the non-individual book was 3.65%. Investments All investments in the Corporations subsidiary and associate companies are carried at cost and not at fair value. Accordingly, as at September 2022 the unaccounted gains on listed investments in subsidiary and associate companies amounted to Rs 224781 crore. Cost income ratio For H1FY2023 cost to income ratio stood at 9.5%. Capital adequacy ratio As at September 2022, capital adequacy ratio stood at 22.5%, of which Tier I capital was 21.9% and Tier II capital was 0.6%. As per regulatory norms, the minimum requirement for the capital adequacy ratio and Tier I capital is 15% and 10% respectively. Consolidated financial results For H1FY2023 the consolidated profit after tax attributable to the Corporation stood at Rs 11862 crore as compared to Rs 10299 crore in the previous year, representing a growth of 15%. Distribution network HDFCs distribution network spans 709 outlets which include 212 offices of HDFCs 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. The Corporation also has online digital platforms for loans and deposits. To cater to non-resident Indians, HDFC has offices in London, Dubai and Singapore and service associates in the Middle East. Financial Performance H1FY2023 The profit before tax for H1FY2023 stood at Rs 10004 crore compared to Rs 8576 crore in the corresponding period of the previous year. After providing Rs 1881 crore for tax, the reported profit after tax stood at Rs 8123 crore compared to Rs 6781 crore in the previous year, representing a growth of 20%. H1FY2023 entailed a volatile environment. Some of the financials for H1FY2023 are not directly comparable with that of the previous year. On account of volatile equity markets, the net gain on investments fair valued through the profit and loss account stood at Rs 151 crore (PY: Rs 548 crore) Dividend income: Rs 2046 crore (PY: Rs 1188 crore). Profit on Sale of Investments: Rs 184 crore (PY: Rs 263 crore). Non-interest expense ratios were higher largely due to an increase in upfront expenses on staffing, loan processing, branch expansion and information technology to enable meeting the increased demand for home loans. These expenses have been incurred upfront, though benefits will accrue over the ensuing quarters. The NII for H1FY2023 stood at Rs 9086 crore compared to Rs 8235 crore in the previous year. During H1FY2023 though lending rates have been increased, there has been a transmission lag between the interest rate increase in borrowing costs and asset repricing. Valuation The book value of the company stood at Rs 679.2 per share, while the adjusted book value (net of 10% of restructured loans) was at Rs 677.0 per share end September 2022. The stock trades at Rs 2497.

HDFC: Standalone results
	2209 (3)	2109 (3)	Var %	2209 (6)	2109 (6)	Var %	2203 (12)	2103 (12)	Var %
Income	15027.27	12217.40	23	28083.06	23615.16	19	47697.78	46754.25	2
Interest Exp.	8559.69	6573.47	30	16115.81	13095.39	23	26739.21	28614.76	-7
NII	6467.58	5643.93	15	11967.25	10519.77	14	20958.57	18139.49	16
Other Inc.	8.78	10.44	-16	17.20	16.11	7	33.13	26.12	27
Total Inc.	6476.36	5654.37	15	11984.45	10535.88	14	20991.70	18165.61	16
Op. Exp.	589.24	529.85	11	1178.03	1080.50	9	2072.68	1798.01	15
OP	5887.12	5124.52	15	10806.42	9455.38	14	18919.02	16367.60	16
Add: Profit on sale of investments	-0.06	-1.45	-96	184.46	258.26	-29	259.29	1395.49	-81
Less: Provision for expected credit loss	473.00	452.00	5	987.00	1138.00	-13	1932.00	2948.00	-34
PBT before EO	5414.06	4671.07	16	10003.88	8575.64	17	17246.31	14815.09	16
EO	0.00	0.00	–	0.00	0.00	–	0.00	0.00	–
PBT after EO	5414.06	4671.07	16	10003.88	8575.64	17	17246.31	14815.09	16
Tax	959.82	890.57	8	1880.82	1794.47	5	3504.13	2787.79	26
PAT	4454.24	3780.50	18	8123.06	6781.17	20	13742.18	12027.30	14
EPS*(Rs)							75.6	66.2
Adj BV (Rs)	677.0	614.4		677.0	614.4		660.7	600.5
* Annualized on current equity of Rs 363.47 crore and EPS is calculated after excluding EO and relevant tax, Face Value: Rs 2 per share,
: EPS cannot be annualize due to seasonality of business, Figures in crore,
Source: Capitaline Corporate Databases