Housing Development Finance Corporation (HDFC) reported a marginal increase of 1.2 per cent in its standalone profit at ₹1,361 crore for the first quarter ended June 2015.

This was helped by a 17 per cent growth in net interest income but limited due to the dividend accounting procedure.

Missing analysts’ estimates, the country’s largest mortgage lender said the results were not comparable, as the dividend payment of ₹315 crore from HDFC Bank, received in July 2015, will be accounted for only in the second quarter.

In the previous fiscal, it had received a dividend of ₹269 crore from HDFC Bank in June 2014 and accordingly the income was accounted for in the first quarter.

Gross non-performing assets were stable at 0.69 per cent though it increased sequentially, while spreads were also stable at 2.31 per cent (2.28 per cent a year ago). The fourth quarter gross NPAs are always the lowest, it being seasonal and a historical trend, said HDFC Vice-Chairman and CEO Keki Mistry. HDFC’s loan book increased 14 per cent to ₹2.31 lakh crore (₹2.03 lakh crore). The average size of loans was at ₹23.41 lakh with an average term of 12 years and an average loan to value of 63 per cent of the loan.

Loans sold

Individual loan book growth after adding back loans sold grew 23 per cent. Non-individual loan book declined as there was repayment of two large loans during the quarter.

The bank sold ₹3,870 crore loans to HDFC Bank during the first quarter, while for FY15 it had sold ₹10,949 crore.

Mistry said the company will raise ₹5,000 crore through a QIP of bonds attached with warrants which will be converted into shares at a certain period of time yet to be finalised. This will be converted at a premium, the quantum of which will be in the range of 25-40 per cent.

HDFC has three major subsidiaries — HDFC Standard Life Insurance Co, HDFC ERGO General Insurance Co and HDFC Asset Management Co.

Its main business is lending to individual home buyers and builders.

The firm’s consolidated net profit during the first quarter stood at ₹2,204 crore (₹1,873 crore).

Asked about foreign partner Standard Life’s plan to increase its stake in the insurance subsidiary, Mistry said it may be finalised in two-four weeks.

On the proposed merger between HDFC and HDFC Bank, he said: “HDFC’s balance sheet was not created out of CASA deposits but out of long-term funding. So, the new liabilities that will be created during the merger, we will have to create the CRR, SLR and PSL…so if the existing balance sheet could be grandfathered only on the new deposits that we create, then it could help.”

New subsidiary

During the quarter, HDFC incorporated a new subsidiary, HDFC Capital Advisors, and has subscribed to 49,940 equity shares of ₹10 each aggregating to ₹4,99,400, representing 99.88 per cent of the issued and paid-up share capital, it said.

On Tuesday, HDFC shares ended down 2.3 per cent at ₹1,304.5 apiece on the BSE.

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