The largest mortgage lender HDFC on Thursday reported a solid set of numbers with a 15 per cent growth in consolidated net income at Rs 4,059 crore, along with better margins and asset quality among other key metrics in the pandemic ravaged June quarter.
On a standalone basis, the bottomline was better with a 17 per cent growth at Rs 3,614 crore, as its income jumped 29 per cent to Rs 29,959 crore in the reporting quarter. Because of the lockdowns, which washed away the whole of April and half of May, leading to very high liquidity of close to Rs 32,000 crore and the resultant negative carry spread, vice-chairman and chief executive Keki Mistry said the current set of numbers are not directly comparable.
Despite the moratorium-driven loss of incomes, majority of its customers repaid loans as only 22.6 per cent of its retail customers availed of the first phase of moratorium and total being only 27 per cent. In the second moratorium ending August 31 only 16.6 per cent of retail customers opted for non-payment option, bringing down total loans under moratorium being only 22 per cent. On another key growth parameter – bad loans ratio – the lender shined with gross bad loans ratio printing in at 1.87 from 1.99, of which retail improving by 3 bps to 0.92, and non-individual at 4.10 from 4.71 for the quarter, Mistry said.
"Owing to the lockdown, retail business was impacted in the quarter. While April was a washout with just Rs 500 crore of disbursals, in May, we did Rs 2,300 crore, with June disbursements touched 68 per cent of the normal and July is around 72 per cent of the normal. Yet the aggregate loan sales were only 71 per cent of the normal during the quarter," Mistry told reporters in a post-earnings video-presser. Similarly, the company maintain a net interest margin of 3.1 per cent but would have been stable at 3.3 per cent had not been for the Rs 181 crore of negative carry on excess liquidity of Rs 31,962 crore. It also gained from lower taxes, which came down to Rs 555 crore from Rs 782 crore a year ago.
On an AUM basis, the growth in the individual loan book was 11 per cent, while non-individual loan book grew 15 per cent, taking the total growth to 12 per cent. Growth in the individual loan book, after adding back loans sold in the preceding 12 months was 17 per cent and same total loan book after adding back loans sold was 16 per cent. Net interest income for the quarter stood at Rs 3,392 crore, up 10 per cent from Rs 3,079 crore.
The company made an additional provisioning, including for the pandemic, of Rs 1,199 crore as against Rs 890 crore a year ago, and Mistry does not see any more pandemic provisions being made as there is already an over Rs 7,000 crore in regular excess provisions than the regulatory minimum. While retail loans grew 17 per cent, after adding back loans sold in the preceding 12 months, its deposits grew at frenetic 26 per cent leaving it flushed with liquidity of around Rs 32,000 crore. Capital adequacy stood at 17.3 per cent as against regulatory requirement of 14 per cent.
Of the total net income dividend contributed Rs 298 crore as against just Rs 1 crore a year ago, and profit on sale of investments came down to Rs 1,241 crore from Rs 1,894 crore. But the company is sitting on close to Rs 1.95 lakh crore of unrelaised gains from its investments, Mistry said, adding net gains on de-recognition of assigned loans of came down to Rs 183 crore from Rs 296 crore.
The HDFC counter closed with over 3.6 per cent loss at Rs 1,811 on the BSE, whose benchmark shed 0.88 per cent.
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