HDFC reported a 15 per cent increase in second quarter standalone net profit at ₹2,101 crore against ₹1,827 crore in the year-ago quarter. This comes on the back of healthy growth in loans and stable spreads.

Net interest margin (the difference between interest earned and interest expended) in the reporting quarter was up 14 per cent year-on-year at ₹2,612 crore.

“Individual loan disbursement grew 23 per cent, which on a base as large as ours is a very substantial increase. Total loan book growth was 18 per cent,” said Vice-Chairman and Chief Executive Keki Mistry.

Loan book, on assets under management (AUM) basis, as of September-end 2017 stood at ₹3.68 lakh crore, an increase of 18 per cent over the previous year.

During the quarter, HDFC sold loans aggregating ₹3,530 crore (of which ₹3,165 crore was to HDFC Bank and ₹365 crore to other banks).

“.…We do not retain all the loans that we originate. We also sell down loans. In the last 12 months, we sold loans aggregating ₹15,433 crore,” said Mistry.

At 3.9 per cent, net interest margin has been stable right through, Mistry said, and added that in the June quarter, it was 3.9 per cent and in the September quarter too, it continued to stand at 3.9 per cent.

Spreads as of September-end 2017 stood at 2.29 per cent (2.28 per cent in the September 2016 quarter).

The unrecognised profit of HDFC’s listed investments (HDFC Bank and Gruh Finance) was ₹1.03 lakh crore. In addition to this, Mistry said it has unrecognised profit from unlisted investments.

“Based on this unrecognised profit, if we were to recalculate the book value per share then the adjusted book value after taking into account the unrealised gain would be ₹902 per share,” he said.

NPAs stood at 1.14 per cent (compared to 1.12 per cent in June quarter). On September 30, HDFC carried a total balance sheet provision of ₹3,235 crore against regulatory requirement of ₹2,500 crore.

“Historically, we have always created a buffer in the provision by transferring 30 per cent of the profits that we get from selling of investments in subsidiaries.

“…In the December 2017 quarter, out of the profits that we will realise on the listing of HDFC Standard Life, a proportion of those profits we will put into a special provision,” explained Mistry.

In the reporting quarter, HDFC’s consolidated net profit (after taking into account its share of profit from, among others, HDFC Bank, HDFC Standard Life, HDFC ERGO and HDFC AMC) was up 17 per cent at ₹2,869 crore.

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