The Hindu Business Line : HDFC spreads seen improving

Mumbai, Oct 29 Housing Development Finance Corporation (HDFC) has reported a 76 per cent increase in Q2 net profit at Rs 646.39 crore, against Rs 368.02 crore in the corresponding quarter of the previous year.

The increase was mainly due to the profit on sale of investment in an associate company, Intelenet Global Services Private Ltd amounting to Rs 313.25 crore.

Profit before considering such exceptional items and tax stood at Rs 582.44 crore, up 24 per cent against Rs 470.11 crore in the year ago period.

Mr Conrad D’Souza, Senior General Manager, Treasury, HDFC, said that the corporation had seen a slight improvement in spreads at the end of the quarter.

The spread (the difference between average lending rates and borrowing costs) increased to 2.3 per cent, against 2.19 per cent in the previous year. The corporation’s cost of funds, stood higher at 8.98 per cent, compared to 7.5 per cent a year ago.

Total income was higher 30 per cent at Rs 1,892.5 crore (Rs 1,456.23 crore) while total expenditure also increased 32.8 per cnet to Rs 1,310.06 crore (Rs 986.12 crore).

Interest income at the end of the second quarter was higher 43 per cent at Rs 1,839.83 crore, against Rs 1,286.93 crore. In terms of expenditure, interest and other charges were up 34 per cent at Rs 1,223.75 crore, against Rs 913.59 crore.

Loan disbursements during the six-month period ending September 30, 2007, were up 27 per cent at Rs 14,275 crore (Rs 11,289 crore) while loan approvals were 29 per cent higher at Rs 18,948 crore (Rs 14,729 crore).

Mr D’Souza said that the demand for loans continued to be steady and the average ticket size of loans was now relatively higher for HDFC at Rs 12 lakh-Rs 13 lakh.

He said, “We will be happy to end the year with credit growth in excess of 25 per cent”.

The capital adequacy ratio of HDFC’s capital adequacy ratio stood at 17 per cent.