HDFC Q4 profit at Rs 2,233 crore, provisions spike on COVID-19 impact; loan growth at 12%

Revenue from operations during the quarter increased 3.4 percent to Rs 11,976 crore, compared to Rs 11,580 crore in corresponding period last fiscal.

Housing Development Finance Corporation (HDFC) on May 25 reported a standalone profit of Rs 2,232.5 crore for the quarter ended March 2020, declining 22 percent due to higher provisions related to COVID-19 and high base last year. But it was supported by lower tax cost (down 44.5 percent YoY).

Provisions (expected credit loss) increased significantly to Rs 1,274 crore for the quarter ended March 2020 which included the impact of COVID-19, against Rs 398 crore in March quarter 2019 and Rs 2,995 crore in December quarter.

Profit in March quarter 2019 had included profit on sale of investments of Rs 312 crore and dividend income of Rs 537 crore.

Net interest income, the difference between interest earned and interest expended, grew by 17 percent to Rs 3,780 crore for the quarter ended March 2020.

Revenue from operations during the quarter increased 3.4 percent to Rs 11,976 crore, compared to Rs 11,580 crore in corresponding period last fiscal.

On an assets under management (AUM) basis, HDFC reported total loan book growth at 12 percent and the growth in individual loan book was 14 percent.

"We had robust growth until March 15 but had tepid growth in second half of March. We could hardly do much business in the second half of March which is otherwise very busy period," Keki Mistry, Vice Chairman and CEO said.

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Corporation said in FY20, 36 percent of home loans approved in volume terms and 18 percent in value terms have been to customers from the Economically Weaker Section (EWS) and low income groups (LIG).

"Spread on loans over the cost of borrowings as of March 2020 stood at 2.27 percent. Spread on the individual loan book stood at 1.92 percent and on the non-individual book at 3.14 percent, said HDFC, adding net interest margin came in at 3.4 percent as of March 2020, against 3.3 percent in previous year.

Company's total capital adequacy ratio (CAR) stood at 17.7 percent as of March 2020.

"Individual NPAs have risen slightly because our collections suffered after lockdown. We expect NPA levels to come down after situation normalises," Keki Mistry said.

The gross non-performing loans as of March 2020 stood at Rs 8,908 crore, which is equivalent to 1.99 percent of loan portfolio, company said, adding the NPA on individual portfolio stood at 0.95 percent while that of the non-individual portfolio stood at 4.71 percent.

HDFC said the actual provisions as of March 2020 were at Rs 10,988 crore, which was Rs 6,800 crore over and above the regulatory requirement.

"26 percent of the Corporation's loans under management have opted for moratorium, and individual loans under moratorium account for 21 percent of the individual loan portfolio," he added.

For the financial year 2019-20, HDFC has registered a 84.5 percent growth in standalone profit at Rs 17,769.35 crore on revenue at Rs 58,738.92 crore that grew by 35 percent over previous year.

Standalone profit was boosted by fair value gain on amalgamation of GRUH Finance with Bandhan Bank, profit on sale of investments and gain on fair value adjustments.

Consolidated profit during the year grew by 29.8 percent to Rs 22,826 crore compared to previous year.

HDFC said the company recommended a dividend of Rs 21 per equity share for the financial year 2019-20.

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