HDFC Shares Rise As Loan Disbursements Jump 181% YoY

Housing Development Finance Corporation (HDFC) shares rose over 1% on the exchanges today after the company released its June 2021 quarter results on the weekend.

The lender's net interest income (NII) for the quarter stood at Rs 41.5 bn compared to Rs 33.9 bn in the previous year, representing a growth of 22% year on year (YoY) while its net interest margin (NIM) stood at 3.7%.

However, the company's net profit declined by 1.7% YoY to 30 bn compared to Rs 30.5 bn in the same period last year.

The company said that the profit numbers for the quarter are not comparable to last year due to lower profit on the sale of investments and higher ESOPs (employee stock options).

Growth witnessed in both affordable housing and premium segment

HDFC's individual loan disbursements grew 181% YoY for the quarter on the back of growth in both the affordable housing and premium segment.

Please note that the growth comes at a relatively lower base.

The company said that there was a preference for ready to move in properties compared to under-construction properties.

The demand for home loans remains strong, and disbursements have picked up with the unlocking of respective locations.

While disbursements during April and May of the current financial year were somewhat impacted, the business has reverted to normalised trends in the months of June and July.

July 2021 disbursements were the highest ever in a non-quarter end month.

Overall Lending Operations

The average size of individual loans stood at Rs 30.9 lakh compared to Rs 29.5 lakh in the financial year 2021.

The assets under management stood at Rs 5.7 tn as against Rs 5.3 tn in the previous year. Individual loans comprised 78% of the assets under management (AUM).

On an AUM basis, the growth in the individual loan book was 14% and growth in the total loan book was 8%.

Rise in NPAs due to the second wave of the pandemic

HDFC said its individual non-performing assets (NPAs) increased due to slippages on account of the impact of the second wave of the pandemic.

The gross non-performing loans for the quarter stood at Rs 111.2 bn. This is equivalent to 2.24% of the loan portfolio.

Total provisions stood at Rs 131.9 bn. This includes provisions of Rs 57.8 bn for the quarter. Of this, Rs 24.4 bn was allocated towards provisioning for standard assets and Rs 33.4 bn towards non-performing assets.

The provisions carried as a percentage of the Exposure at Default (EAD) stood at 2.64%.

On the collection front, it believes that collection efforts were hindered due to the recovery teams being unable to do field visits during the lockdown period.

However, yet, the overall collection efficiency for individual loans improved for June 2021 and stood at 98.3% compared to 98% in March 2021.

How the markets reacted to HDFC June quarter results today

Shares of the company opened the day higher at Rs 2461 on the BSE and Rs 2466 on the NSE today after the company declared its results over the weekend.

The scrip then rose marginally (0.9%) on the exchanges.

The share touched its 52-week high of Rs 2895.4 and a 52-week low of Rs 1623 on 16 February 2021 and 24 September 2020.

Over the last 30 days, the share price of HDFC is down by 1.3%. However, in the last year, the share price has moved up by 41.5%.

About HDFC

Housing Development Finance Corporation (HDFC) is an Indian financial services company based in Mumbai, India.

It is a major housing finance provider in India which also has a presence in banking, life and general insurance, asset management, venture capital, and education loans.

HDFC's distribution network spans 396 outlets (including 109 offices of HDFC's distribution company HDFC Sales Private) which cater to approximately 400 towns and cities spread across India.

To cater to non-resident Indians, HDFC has offices in London, Singapore and Dubai and service associates in Middle East countries.

In addition, HDFC covers over 90 locations through its outreach programmes.

For more details about the company, you can have a look at HDFC's factsheet and HDFC's quarterly results on our website.

For an overview on the sector, you can check out our investment & finance sector report.

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