HDFC said it expects to close the fiscal with around 25 per cent spike in loan book on the back of a 33 per cent rise in Q3 net profit at Rs 891 crore, driven by higher retail sales and one-time income from sale of its investment in IL and FS.
"We are hopeful of clocking 20-25 per cent rise in the loan book for the full fiscal. We are also hopeful of maintaining a good interest spread and margins in the next quarter. In the third quarter our interest spread stood at 2.15 per cent, while net interest margin (NIM) at 4.31 per cent, Housing Development Finance Corp (HDFC) vice-chairman and chief executive Keki M Mistry told reporters.
Interest spread refers to the per centage difference between the interest rate charged on a bank loan and the lender's cost of funds, while net interest margin (NIM) is the difference between interest income generated by a bank and the interest it pays to its lenders. NIM is similar in concept to net interest spread but is the nominal average difference between borrowing and lending rates, and normally remains higher than interest spread.
HDFC saw a massive 39 per cent jump in retail loan disbursals during the reporting quarter, and the overall loan book rose 27 per cent to Rs 5,387 crore, Mistry said.
While HDFC's Q3 interest spread stood almost unchanged at 2.15 per cent against 2.25 per cent in Q3 last fiscal, its NIM also was nearly unaltered at 4.31 per cent in Q3 to Rs 1,124 crore, a growth of 19 per cent, against 4.4 per cent in Q3 of FY10. On this Mistry said, he is not worried about lower or higher NIM as its focus is on maintaining a higher net interest spread.
There has also been improvement in the company's NPA levels as it came down to 0.85 per cent from 0.94 per cent in the same period last fiscal.
To meet the recently introduced higher provisioning norms set by the home finance regulator National Housing Board for dual rate home loans, HDFC has made an additional provision of Rs 272 crore during Q3, Mistry said. Recently, NHB, in line with RBI action, increased the provisioning coverage ratio of teaser loans to 2 per cent from 0.4 per cent as it felt that there has been an asset bubble in the market.
Total income rose by 20.2 per cent to Rs 3,321 crore, as against Rs 2,762.2 crore in the year-ago quarter. HDFC reported a 20.6 per cent increase in its loan book at Rs 1,09,051 crore at the end of December compared to Rs 90,110 crore in the same period last fiscal.
During the quarter, HDFC earned a one-time income of Rs 167.22 crore from the sale of its investment in IL and FS. In the reporting quarter, the lender had offloaded 2 per cent of its stake in educational arm of IL and FS. In the same quarter last year, its other income, primarily from treasury operations stood at a lower Rs 51.3 crore.
During the first nine months of the fiscal, HDFC reported 26 per cent rise in net profit at Rs 2,393 crore compared to Rs 1,900 crore in the year-ago period. Total income during the nine months rose to Rs 9,093.2 crore against Rs 8,461.5 crore, up 7 per cent.
Ruling out any major correction in residential prices, he said the so-called price spike is only in certain pockets of Mumbai and
Mistry also ruled out any fund raising in Q4 as HDFC is well-capitalised with a tier 1 capital of 13.13 per cent and a tier 2 of 1.1 per cent, taking its overall CAR to 14. 2 per cent, against the regulatory provision of 6 per cent.
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