HDFC Q2 Profits Down 28%, Shares up 6%

“In reality, there is no dip in profits, profits are actually higher by 27% after you remove dividend income, profit on the sale of investments, and the ECR provisioning.” said, Keki Mistry, vice chairman, and managing director.

HDFC Representational Image (Getty)

Housing Development Finance Corporation (HDFC), a provider of housing finance on Monday reported a 28% fall in net profit for the quarter ending 30 September 2020 at Rs 2,870 crore compared to Rs 3,962 crore in the year-ago period. However, HDFC shares went up 6.24% to close at Rs 2042.65 in a firm Mumbai market on Monday, valuing the Corporation at Rs 3,66,819.56 crore. The lender, in the second quarter last year, had booked a profit on the sale of its stake in Gruh Finance to Bandhan Bank, and this quarter’s profit was reported after providing Rs 662 crore for tax. When asked the reason for the fall in profits, Keki Mistry, vice chairman, and managing director said, “In reality, there is no dip in profits, profits are actually higher by 27% after you remove dividend income, profit on the sale of investments, and the ECR provisioning.” The profit numbers for the quarter ended September 30, 2020, are not directly comparable with that of the previous year because of the dividend income, profit on the sale of investments, and the ECR provisioning, said the lender. On a like-for-like comparison, after adjusting dividend, profit on the sale of investments, fair value adjustments, net gains on loans assigned, charge for employee stock options, and provisioning the adjusted profit before tax for the quarter is Rs 3,366 crore compared to Rs 2,646 crore in the previous year, reflecting a growth of 27%, said HDFC. HDFC’s net interest income during the quarter increased by 21% year-on-year to Rs 3,647 crore. However, its total revenue from operations fell 13% to Rs 11,728 crore, due to a loss of Rs 61 lakh on the sale of investments in the reported quarter compared with a profit of Rs 1,627 crore a year ago. The company said individual loans are reverting to pre-Covid-19 levels with disbursements at 95% levels of the previous year and individual loan approvals growing 9% during the quarter. The corporation made a provision of Rs 1,200 crore towards COVID-19 related provisioning. Lender’s gross non-performing loans as of September 30, 2020, stood at Rs 8,511 crore, or equivalent to 1.81% of the loan portfolio. The non-performing loans of the individual portfolio stood at 0.84% while that of the non-individual portfolio stood at 4.19%. Total advances for the home financier rose by10% from a year ago to Rs 5.4 lakh crore. On an asset under management basis, growth in the individual loan book was 9%. Growth in the non-individual loan book stood at 13%. According to Mistry, disbursements in October were the second-highest in HDFC’s history, indicating a strong appetite for housing loans. In August, the Housing Finance Corporation raised Rs 10,000 crore of equity capital through a Qualified Institutions Placement (QIP) and also received Rs 307 crore upfront through the issue of warrants.