Mortgage lender Housing Development Finance Corp (HDFC) reported a 219 per cent rise in profit before tax (PBT) at Rs 9,143 crore in the third quarter ended December 31 (Q3FY20), mainly aided by a one- time fair value gain of Rs 9,020 crore. Its PBT was Rs 2,868.80 crore in the year-ago period.
However, profit before dividend, sale of investments, fair value changes, and provision for losses grew 7 per cent year-on-year (YoY) at Rs 3,075.43 in Q3FY20, against Rs 2,873.62 crore in Q3FY19.
The company has received a fair value gain of Rs 9,020 crore in Q3FY20 from de-recognition of investment in Gruh Finance, which got merged with private sector lender Bandhan Bank. Gruh Finance was the affordable housing arm of HDFC. The mortgage lender booked a 296 per cent rise in net profit at Rs 8,372.49 crore in Q3FY20, against Rs 2,113.80 in Q3FY19.
Provisions for the housing finance company have gone up substantially in the third quarter. In Q3FY20, the company provided Rs 2,995 crore for loans, against Rs 116 crore in Q3FY19. “We have been extremely conservative in our provisioning. That’s the policy we have followed all these years and we continue to remain conservative in our provisioning,” said Keki Mistry, vice-chairman and chief executive officer of HDFC.
For the nine months ending December 2019 (9MFY20), the total provisions made by the housing finance firm was Rs 4,639 crore. On a balance sheet level, the actual provisions of the lender stood at Rs 9,934 crore.
“If we were to make provisions based on time period of default, which is required by regulation, then the total provision we need to carry would have been Rs 3,624 crore. As opposed to that number, we are carrying a provision which is Rs 6,310 crore higher at Rs 9,934 crore,” Mistry said. The provisions carried as a percentage of the Exposure at Default is equivalent to 2.25 per cent.
The gross non-performing assets (NPAs) at the end of Q3FY20 stood at 1.36 per cent of the loan portfolio, against 1.22 per cent in the year-ago period, up 14 basis points. In the individual segment, the non-performing assets of the lender were up marginally to 0.75 per cent in Q3FY20, against 0.68 per cent a year ago.
Similarly, in the non-individual segment, the NPAs of the lender stood at 2.91 per cent in Q3FY20 versus 2.46 per cent Q3FY19.
The net interest income of the lender was up 9 per cent YoY at Rs 3,240 crore in Q3FY20, against Rs 2,984 crore in Q3FY19. The net interest margin stood at 3.3 per cent in the reporting quarter, against 3.4 per cent in the year-ago period.
The overall loan book of the lender grew 13.4 per cent to Rs 4.41 trillion at the end of December 2019, from Rs 3.89 trillion in the year-ago period. The individual loan book grew more than 16 per cent YoY and the corporate book grew 6 per cent.
The shares of the mortgage lender closed at Rs 2,395.80, down 2.25 per cent on the BSE.