Housing Development Finance Corporation (HDFC) posted an 18 per cent jump in net profit at ₹5,414 crore for Q2FY23. This was led by robust loan growth and a 30 per cent rise in interest and other charges of ₹8,560 crore.

Sequentially, the profit after tax was up 21 per cent, largely led by a jump in dividend income to ₹1,360 crore from ₹687 crore.

HDFC said that demand for home loans continues to be strong, with growth seen across mid-income segments and high-end properties. Affordable housing loans constituted 23 per cent of the portfolio as of September 30.

AUM (assets under management) of the company stood at ₹6.9 lakh crore, 16 per cent higher year-on-year. Individual loans comprised 81 per cent of the AUM, a rise of 20 per cent. Retail disbursements for the quarter were at ₹44,000 crore, with individual home loans constituting 93 per cent of total disbursements.

In the post earnings call, Vice-Chairman and CEO Keki Mistry said growth in home loans has been broad-based across the country, and even metro cities which were not contributing much over the last 1.5-2 years, are now seeing brisker and faster rate of growth.

During the quarter, HDFC assigned loans of ₹9,145 crore to HDFC Bank, taking the outstanding of individual loans sold to ₹93,566 crore as of September 30.

Interest income hit by rate hikes

The housing financier said that successive rate hikes by the Reserve Bank of India had a short-term impact on its net interest income and to a lesser extent on the margins.

“Though lending rates have increased, there has been a transmission lag between the interest rate increase in borrowing costs and asset repricing. In the corresponding six months of the previous year, due to the second wave of Covid-19, there was ample liquidity in the system and consequently, overnight interest swap rates fell to very low levels, thus the expanding NII and NIM,” it said.

NII for the quarter was up 13 per cent on year at ₹4,639 crore, whereas NIM was at 3.4 per cent lower than 3.6 per cent in the year ago period.

Mistry said that as assets gets repriced over the next three months, HDFC will start to see the benefit on margins from the coming quarter. He added that asset repricing usually happens with a lag of 1.5 months from the rise in borrowing costs, which has led to the 10-12 bps compression in NIM.

The collection efficiency for individual loans was over 99 per cent during the quarter. The gross NPA ratio stood at 1.6 per cent, wherein the ratio for the individual portfolio was 0.9 per cent and for the non-individual portfolio was 4.0 per cent.

HDFC’s capital adequacy ratio was at 23 per cent as of September 30, of which tier-I capital was 22 per cent and tier-II capital was 0.6 per cent.

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