HDFC net dips a tad; ‘second wave impacts NPAs, collections’

Demand strong, buyers prefer ready-to-occupy units: Mistry

Housing Development Finance Corporation Ltd. (HDFC) on Monday said first-quarter consolidated net profit rose 31% to ₹5,311 crore.

However, standalone net profit was lower at ₹3,000.67 crore compared with ₹3,051.52 crore, on account of low dividend income and far less profit on sale of investments.

Profit on sale of investments stood at ₹263 crore compared with ₹1,241 crore a year earlier; dividend income stood lower at ₹16 crore compared with ₹298 crore.

Net interest income (NII) rose 22% to ₹4,147 crore. The collection efficiency ratio for individual loans improved to 98.3% in June compared with 98% in March.

“Individual NPAs increased due to slippages on account of the impact of the second wave of the pandemic,” vice-chairman Keki Mistry said in a conference call. “Collection efforts were hindered due to recovery teams being unable to do field visits during the lockdown,” he added.

“Also, various court orders temporarily curbing recovery efforts of financial institutions, including refraining [from] possession activities under SARFAESI hampered the collection efforts,” he said.

He said gross non-performing loans as on June 30 stood at ₹11,120 crore, or 2.24% of the loan portfolio.

As per regulatory norms, HDFC is required to carry a total provision of ₹5,778 crore. Of this, ₹2,443 crore is towards provisioning for standard assets and ₹3,335 crore, towards non-performing assets.

However, provisions as on June 30 stood at ₹13,189 crore. Cumulatively, COVID-19-related provisions were ₹1,017 crore.

Individual loan disbursements grew 181% to ₹25,518 crore from a year earlier.

Home loans grew both in the affordable housing segment and high-end properties. There was a preference for ready-to-move-in properties compared with those under construction, Mr. Mistry said.

Housing demand continued to remain strong and business had reverted to normalcy in June and July, HDFC said in a filing. “The key risks to business remains a third wave and variants of the virus,” it added.

As on June 30, ₹4,482 crore had been restructured under the RBI’s Resolution Framework for COVID-19 Related Stress (OTR 1 & 2.0). This is equivalent to 0.9% of the loan book. It had written off loans of ₹530 crore.

Of the loans restructured, 38% were individual loans and 62% non-individual loans, mostly of just one account, it said.

HDFC also announced the appointment of Rajesh Narain Gupta, managing partner, SNG & Partners, Advocates and Solicitors as independent (additional) director and P.R. Ramesh, formerly with Deloitte, as additional (non-executive, non-independent) director.

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