News Analysis

HDFC: Low delinquencies, steady growth in retail loans

Radhika Merwin BL Research Bureau | Updated on January 09, 2018 Published on October 30, 2017

BL22HDFC   -  Bloomberg

Good show continues despite moderation in bank credit growth to the housing segment

Healthy growth in retail loans, stable margins, and steady asset quality, sum up the September quarter results for market leader Housing Development Finance Corporation (HDFC). The lender continued to put up a good show despite the moderation in bank credit growth to the housing segment in recent times.

Retail loans (including sale of loans to HDFC Bank) have grown by 23 per cent in the latest September quarter, despite the headwinds in the property market. The strong demand from the mid-income group has kept growth steady.

Non-retail inches up

Aside from the healthy growth in retail loans, HDFC’s non-retail segment too has been picking up in recent quarters. The growth has been led by lease rental discounting— loan against future rental receipts from lease contracts with corporate tenants. The growth in non-retail loans which inched up to 17 per cent in the December and March quarter, scaled up to 22 per cent in the June quarter. In the latest September quarter, the growth has inched up to 23 per cent.

HDFC’s ability to maintain low level of delinquencies over the years has been a key positive. The gross non-performing assets (GNPA) in the September quarter, only marginally went up to 1.14 per cent of loans from 1.12 per cent in the June quarter.

Steady spread

The competition in the housing finance industry has been intensifying over the past two to three years. Aside from established housing finance companies and NFBCs, commercial banks too have wanted a piece of the action, given their lacklustre growth in corporate lending and the fact that housing finance offers a low risk, consistent growth alternative.

Over the past one to two years, lending institutions have cut home loan rates by 1-1.2 percentage points. Despite the lower yield on loans, HDFC has managed to hold its spread (return on loans less cost of borrowings) steady. In the September quarter, the company’s spread on loans stood at 2.29 per cent, similar to the levels seen in the previous quarter and marginally higher than the same quarter last year.

Published on October 30, 2017

A letter from the Editor

Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!


Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.