Healthy growth in interest income and a jump in profit on sale of investments helped Housing Development Finance Corporation (HDFC) post a 25 per cent increase in standalone net profit at ₹2,467 crore in the second quarter ended September 30, 2018, against ₹1,978 crore in the year-ago period.

Keki Mistry, Vice Chairman and Chief Executive Officer, emphasised that though liquidity has been tight in the market, the corporation was able to generate liquidity. HDFC does not have any exposure to the debt-laden IL&FS group’s debt instruments, he added.

India’s largest standalone housing finance company (HFC) reported a 19 per cent year-on-year growth in interest income at ₹9,673 crore (₹8,114 crore in the year-ago period).

Profit on sale of investments surged to ₹1,000 crore (₹63 crore) as the corporation offered 85,92,970 equity shares of ₹5 each of its subsidiary HDFC Asset Management Company via an initial public offer, resulting in a profit of ₹891 crore.

Finance costs rose 21 per cent to ₹7,045 crore in the reporting quarter, against ₹5,845 crore in the year-ago period.

Expenses incurred towards impairment on financial instruments (expected credit loss) jumped ₹401 crore, against a write-back of ₹62 crore in the year-ago period. Employee benefit expenses declined 67 per cent y-o-y to ₹128 crore (₹387 crore).

Net interest income (without considering income from loans sold) was up 16 per cent at ₹2,594 crore vis-a-vis ₹2,236 crore in the corresponding quarter of the previous year. “The individual demand for housing loans continues to remain very robust. Contrary to the perception in the markets, there is no slowdown in the demand for housing loans, particularly in the affordable and middle-income housing market. So, that contributes to our growth. Disbursements have been healthy,” said Mistry.

The loan book grew 17 per cent year-on-year to ₹3,79,091 crore as of September-end 2018, against ₹3,24,269 crore as of September-end 2017.

On an assets under management basis, the growth in the individual loan book was 18 per cent and the non-individual loan book grew by 13 per cent.

No liquidity crunch

“Though liquidity has been tight in the market, we have been able to generate liquidity as and when we wanted. We have not faced any real liquidity issues in that sense. However, as a matter of prudence, we are putting aside more money in cash and cash equivalents (such as liquid mutual funds) than we normally do taking into account what is happening in the economy.

“But otherwise availability of funding is always there. We raise money through a plethora of different sources – term loans and bonds, including masala bonds, external commercial borrowings, and deposits,” explained Mistry.

HDFC shares closed at ₹1,761.70 apiece, down 0.44 per cent over the previous close on the BSE.