HDFC Looks To Offload Rs 2,000 Crore Stressed Developer Loans: Report

These loans are spread across 7-8 accounts and reportedly include advances to the local owners of Radisson Blu properties

India’s housing major Housing Development Finance Corporation (HDFC) is in the final stages to offload stressed loans of around Rs 2,000 crore extended to developers ahead of its merger with HDFC Bank, a report by The Economic Times (ET) said.

According to the report, HDFC’s asset quality has been improving in the past few quarters and it wants to sell the stressed loans before its merger with HDFC Bank which will create a financial behemoth. Its individual gross non-performing assets (GNPA) decreased from 0.99 per cent to 0.75 per cent as of March 31. Non-individual GNPA decreased from 4.76 per cent to 2.9 per cent.

These loans are spread across 7-8 accounts and reportedly include advances to the local owners of Radisson Blu properties. The mortgage lender is engaged in negotiations with asset reconstruction companies to sell these loans. Alvarez & Marsal, a consulting firm, is actively seeking potential buyers for the loans.

The report says some of these loans might include NPAs while some may be stressed, but haven't formally been declared yet as NPAs.

During March, HDFC had showcased some of these accounts for potential sale but did not proceed due to lower-than-expected recovery prospects, the report mentioned. Omkara ARC bought the Rs 150 crore worth of outstanding loans of Matoshree Developers for Rs 50 crore, which entails a 33 per cent recovery for HDFC.

During Q4, HDFC had received a bid from Omkara ARC for around Rs 1,100 crore pooled stressed assets but the bid value fell short of the mortgage lender's expectations, resulting in the sale not taking place, the report added.

Meanwhile, HDFC on last Thursday clocked a 20 per cent growth in standalone net profit to Rs 4,425 crore for the quarter ending March 2023 on the back of higher interest income. The firm's profit in the January-March quarter of 2021-22 was Rs 3,700 crore.

In a filing to stock exchanges, HDFC said there was an 18 per cent growth in the standalone profit after tax for the year ended March 31, 2023, at Rs 16,239 crore compared to Rs 13,742.18 crore in 2021-22. Assets under management stood at over Rs 7.2 lakh crore.

"After providing Rs 973 crore for tax, the reported profit after tax stood at Rs 4,425 crore compared to Rs 3,700 crore in the corresponding quarter of the previous year, representing a growth of 20 per cent," the lender said. The net interest income (NII) for the quarter ended March 31, 2023, stood at Rs 5,321 crore compared to Rs 4,601 crore in the previous year, representing a growth of 16 per cent.