Housing Development Finance Corporation (HDFC) has posted a 12 per cent growth in third quarter net profit aided by more demand for home loans in tier-I and tier-III towns.
In the three-month period ended December 31, 2014, the Mumbai-based home loan provider posted a standalone net profit of ₹1,425 crore against ₹1,277 crore a year earlier. Total income was up 14 per cent at ₹6,871 crore.
As at December 31, 2014, the loan book stood at ₹2,19,951 crore, representing a growth of 14 per cent.
Most of HDFC’s smaller-sized peers also posted net profit growth in double digits driven by higher demand for home loans from customers in an under-penetrated home loan market.
Indiabulls Housing Finance and Dewan Housing Finance posted net profit growth of 21 per cent and 16 per cent, respectively. LIC Housing Finance, however, posted only a 6 per cent net profit growth.
Latest RBI data show that bank credit to home buyers has slowed a tad. The data showed that home loan growth declined to 16.4 per cent in November 2014 from 18.1 per cent in the year-ago period.
“There is some slowdown…but growth for home loan companies will be good as the country’s population is young,” said Keki Mistry, Vice-Chairman and CEO, HDFC.
Mortgage to GDP penetration in India continues to be among the lowest in the world. It currently stands at a mere 9 per cent of GDP in India compared with about 80 per cent in major developed markets.
The situation is so despite the fact that housing is one of the major requirements in the country. There is an estimated shortfall of 21 million houses in the country, majority of them (about 19 million) in the lower income group (LIG) segment.
The LIG segment remains largely outside the purview of housing finance loans from mainstream financiers, including banks, because this segment often lacks the “required” documentation to get such loans.
“Mortgage penetration will improve over time…most of the growth is happening in the affordable housing segment,” according to Mistry.
Affordable housing is defined as houses with value of ₹50 lakh in metropolitan cities and ₹40 lakh in other centres.
HDFC shares closed 2.61 per cent lower at ₹1,309.55 on the BSE on Thursday.