Buoyed by a one-time exceptional gain on divestment of a part of its stake in subsidiary HDFC Standard Life Insurance Company and deferred tax credit, Housing Development Finance Corporation (HDFC) reported a standalone net profit of ₹5,670 crore in the third quarter ended December 31, 2017. The housing finance major had reported a net profit of ₹1,701 crore in the year-ago quarter.

Stake sale

During the reporting quarter, the sale of 9.52 per cent stake in HDFC Life resulted in a profit of ₹5,250 crore for the corporation. The company said the transaction has triggered the provision of Minimum Alternate Tax under the Income Tax Act, and the tax expense has been adjusted accordingly.

HDFC received a deferred tax credit of ₹113 crore in the reporting quarter. In the year-ago quarter, it had incurred a deferred tax expense of ₹69 crore.

Net interest income was up 14 per cent year-on-year to ₹2,929 crore (₹2,575 crore in the year-ago period).

During the reporting quarter, the loan book increased by ₹18,059 crore to ₹3,42,136 crore. Of the increase, 73 per cent was on account of loans to individuals, 25 per cent was on account of loans to corporate bodies and the balance was to others.

Net interest margin was lower at 3.86 per cent against 3.95 per cent in the year-ago quarter.

Keki Mistry, Vice Chairman and CEO, said: “The demand for individual loans was strong. Our individual loan disbursements was higher by 27 per cent, which, on a base as large as ours, is a very substantial growth. Also, a lot of the lending was done to people in the economically weaker sections (EWS) and lower income groups (LIG).

“So, 39 per cent of our loans in numbers was to people in the EWS or LIG categories. We do about 8,000 loans every month to people in these two categories. We have seen 32 per cent growth in the EWS category and 39 per cent growth in the LIG category.”

The average size of individual loans increased to ₹26.2 lakh (₹25.7 lakh in the year-ago quarter).

Gross non-performing loans (GNPL) as of December 31, 2017, amounted to ₹3,937 crore (₹2,341 crore as of December 31, 2016). This is equivalent to 1.15 per cent (0.81 per cent in the year-ago period) of the loan portfolio. Mistry observed that the GNPL is over 1 per cent largely due to a single loan to Essar (exposure of a little under ₹1,000 crore). “If you remove this exposure, the NPL will be 0.75-0.80 per cent. Hopefully, in the next one or two quarters, this should get resolved,” he said.

HDFC, in a statement, said it has created an additional special provision (as a charge to the statement of profit and loss) of ₹1,575 crore, being 30 per cent of the pre-tax gains on the HDFC Life transaction, thereby building an additional buffer against any expected risk in the future.

The corporation reported a consolidated net profit, including the results of subsidiaries HDFC Standard Life, HDFC ERGO General Insurance, Gruh Finance, and HDFC Asset Management Company, of ₹6,677 crore. In the year-ago period, the net profit was at ₹2,729 crore.

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