Strong retail loan growth, stable margins and steady asset quality were the key highlights of HDFC’s June quarter performance. Maintaining its market leadership in the housing finance market, HDFC delivered a growth of 17 per cent in net profit in its core business.

This was driven by strong growth in individual loans. The incremental growth in loans during the quarter came entirely from this segment. Individual loans grew 24 per cent (net of loans sold in the preceding 12 months). Including these loans, growth has been 31 per cent during the quarter.

Non-individual loan growth was slower at 11 per cent. Loans to individuals now contribute close to 67 per cent of total loans as against 64 per cent in the previous year. The company’s average loan size during the quarter was Rs 21.9 lakh as against Rs 21.6 lakh in the June quarter last year.

The spreads have remained stable at 2.3 per cent, with individual loans registering a marginal uptick during the quarter. The company’s net interest margin slipped a marginal 10 basis points to 3.9 per cent.

Bond focus

HDFC’s funding mix remains skewed towards bonds, which now constitute 59 per cent of the overall borrowing. The share of bank loans is just 8 per cent, which has worked well for the company, given the high base rates of banks. However, the company has the flexibility to shift between various sources of funding, depending on the movement of interest rates. This should help maintain stable spreads.

HDFC also maintained stable asset quality, with gross non-performing assets at 0.77 per cent of loans. The capital-adequacy ratio stood at a healthy 16.3 per cent against the mandated 12 per cent.

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