HDFC Q1 net profit falls a tad, NII jumps

Housing Development Finance Corp (HDFC) reported a slight decline in its standalone net profit for the first quarter through June 2021, as a sharp fall in expenses offset a fall in revenue.

Net profit for the April-June period fell 1.7% to Rs 3,000.67 crore from Rs 3,051.52 crore a year earlier, India’s biggest mortgage lender said.

Interest income slipped 2.5% to Rs 10,523.36 crore while total costs dropped 17.5% to Rs 7,758.57 crore.

On the plus side, HDFC’s net interest income—the difference between interest earned and paid—forthe quarter climbed 22% to Rs 4,147 crore from Rs 3,392 crore a year earlier.

Other key details:

1. Profit before tax for Q1 rose to Rs 3,905 crore from Rs 3,607 crore a year earlier.

2. Gross non-performing loans as of June 30, 2021 stood at Rs 11,120 crore, or 2.24% of the loan portfolio.

3. The Net Interest Margin was 3.7%.The spread on loans over the cost of borrowings for Q1 was 2.29%.

4. HDFC’s capital adequacy ratio stood at 22.0%, above the minimum requirement of 15%.

5. Consolidated profit after tax for Q1 climbed 31% to Rs 5,311 crore from 4,059 crore a year earlier.

Commentary:

HDFC said it recorded growth in home loans both in the affordable housing segment and high-end properties. Customers preferred ready-to-move-in properties instead of under-construction houses.

The lender also said that business was affected during the quarter ended June 30, 2021 because of the second wave of the Covid-19 pandemic. A significant part of the quarter entailed localised lockdowns and restrictions.

However, the second wavewas less disruptive compared to the corresponding quarter of the previous year when there was a national lockdown.

In addition, there is now a significant increase in the usage of digital platforms to conduct business, HDFC said.