The Hindu Business Line : HDFC net up 22 pc in Q1

Mr Deepak Parekh, Chairman, HDFC, and Mr K. M. Mistry, Managing Director, addressing the 27th annual general meeting in Mumbai on Monday. - - Shashi Ashiwal

Mumbai , July 19

HOUSING Development Finance Corporation has reported a 21.9 per cent increase in net profit, year on year, for the quarter ended June 30, 2004.

The company reported a net profit of Rs 204.62 crore for the quarter against Rs 167.76 crore in the corresponding quarter the previous year.

Income from operations amounted to Rs 761.17 crore (Rs 725.88 crore). Interest charges decreased to Rs 464.46 crore from Rs 478.91 crore.

Gross profit (after interest but before depreciation and tax) increased 20 per cent, to Rs 252.41 crore (Rs 210.2 crore).

Loan approvals during the quarter rose 31 per cent to Rs 3,566.79 crore (Rs 2,731.43 crore); disbursements rose 29 per cent, to Rs 2,690 crore (Rs 2,091.82 crore).

The loan portfolio, inclusive of investment in preference shares, debentures and inter-corporate deposits for financing real estate projects amounted to Rs 30,246 crore as on June 30, 2004, a rise of 27 per cent from the year-ago figure of Rs. 23,778 crore.

Out of the total income for the quarter, interest on loans amounted to Rs 590 crore (Rs 568.4 crore). Fees and other charges were marginally lower, at Rs 25.76 crore (Rs 26.97 crore); dividend income grew to Rs 38.13 crore (up from Rs 23.28 crore), with income from leased properties showing a big rise to Rs 37.24 crore (Rs 6.74 crore).

As on June 30, 2004, the company's capital adequacy ratio stood at Rs 14.7 per cent of the risk-weighted assets (of which Tier I capital was 13.2 per cent). The minimum requirement is 12 per cent.

HDFC's deposit base as on the same date stood at Rs 9,426 crore, with deposit accounts numbering over 1.2 million.

During the same period, the company's total assets grew 26 per cent, to Rs 33,748.92 crore.

Loans drawn from commercial banks during the current financial year amount to Rs 2, 833 crore, private placements of non-convertible debentures raised another Rs 900 crore, with refinance availed from National Housing Bank amounting to Rs 250 crore.

Last month, HDFC raised subordinated debt amounting to Rs 400 crore for a tenure of seven years, this being the first time that the corporation has raised Tier II capital, said a news release from the company.

Insurance partners may get more stake on FDI hike

HDFC expects growth in approvals and disbursals to be in the range of 25 per cent to 30 per cent, said Mr Deepak Parekh, Chairman, at the company's AGM on Monday.

"We have been able to maintain this in the current quarter (just ended)," he added. HDFC's intent is to maintain spreads at a minimum of two per cent.

At the AGM, shareholders approved enabling resolutions that hiked the borrowing limit of HDFC to Rs 50,000 crore, up from Rs 35,000 crore, and also to raise $500 million through issue of foreign currency bonds or other such securities.

HDFC plans to open 20 new branches during the current year.

With interest rates appearing to pick up, the demand for fixed rate loans is rising, Mr Parekh said. At least 25 per cent of applicants want fixed loan rates, whereas a year back, 99 per cent wanted to settle for the floating rate.

The educational cess of two per cent would impact HDFC by Rs 4 crore, he said. On the other hand, the services tax could be applicable to loan processing fees, he added.

The company's subsidiary, HDFC Investments Ltd, a holding company, is in joint venture with IFC, Egyptian American Bank (a joint venture of American Express) and a couple of other entities in an Egypt-based mortgage finance company.

HDFC would own a 10 per cent stake in the company.

HDFC also has separate agreements with Standard Life and Chubb. As and when the FDI limit in insurance is raised, HDFC would sell more equity to these partners. "We have to wait for the FDI limit hike to come through."

HDFC Standard Life Insurance's net loss for 2003-04 was Rs 23 crore, with cumulative losses at Rs 98 crore. Net loss at HDFC Chubb last year amounted to Rs 22 crore, said Mr Parekh.

He expects both companies to turn the corner in two years.

HDFC and SBI would have to bring down their stake of 40 per cent each in Clearing Information Bureau Ltd so that the company's ownership would be more broadbased. Mr Parekh also said that HDFC was in talks with TCS over Intelenet, their BPO joint venture. Market talk has it that TCS no longer finds it part of its core business. "It is a sensitive issue, and we are in discussions," said Mr Parekh.

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