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The market value of Housing Development Finance Corporation (HDFC) Ltd’s investment in RBL Bank has eroded 60.52 per cent in just one quarter from Rs 304 crore as at December-end 2019 to Rs 120 crore as at March-end 2020.
India’s largest standalone housing finance company, in a regulatory filing, said the risk averseness in the financial sector, which was exacerbated by COVID-19 disruptions, resulted in a drop in the share price of RBL Bank during the quarter ended March 31, 2020.
HDFC’s acquisition cost in RBL Bank (earlier called Ratnakar Bank) in 2011 was Rs 60 crore.The share price of RBL Bank on BSE declined from Rs 344.80 apiece as on December-end 2019 to Rs 135.65 as on March-end 2020. On Friday (April 03, 2020), RBL Bank shares closed at Rs 110.95 apiece, down 15.53 per cent over the previous close.
“As per Ind AS norms, this investment is classified as Fair Value Through the Profit and Loss (FVTPL). Hence the debit to the Statement of Profit and Loss for the quarter ended March 31, 2020 is Rs 184 crore.
“However, the difference between the market value of the investment as at March 31, 2020 and the actual cost of the investment to HDFC is a gain of Rs 60 crore,”HDFC said in the filing.
The Corporation said it did not receive any dividend income from its subsidiary companies during the quarter ended March 31, 2020 (Previous Year: Rs 533 crore). As per the Finance Act, 2020, dividend distribution tax has been abolished with effect from April 1, 2020.
During the quarter ended March 31, 2020, HDFC said there was no sale of investments in subsidiary/associate companies (Previous Year: Rs 321 crore).
Loans assigned
As per the filing, during the quarter ended March 31, 2020, the Corporation assigned loans amounting to Rs 5,479 crore compared to Rs 2,418 crore in the corresponding quarter of the previous year.
All the loans assigned during the quarter ended March 31, 2020 were to HDFC Bank pursuant to the buyback option embedded in the home loan arrangement between the Corporation and HDFC Bank.
The Corporation said individual loans sold in the preceding 12 months amounted to Rs 24,127 crore (Previous Year: Rs 25,150 crore).
ends
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