HDFC Q3 net profit falls 65%

HDFC Q3 net profit falls 65%

Housing Development Finance Corporation’s (HDFC) third-quarter profit fell as it set aside higher provisions and reported a one-time gain a year earlier.
Mortgage lender, on Tuesday, reported a 65% year-on-year (YoY) decline in standalone net profit to Rs 2,925.83 crore for the quarter ended December 2020 (Q3FY21) on the back of lower income. The housing financier’s PAT stood at Rs 8,372 in the year-ago period (Q3FY20).
Sequentially, the profit grew 2% from Rs 2,870 crore clocked in Q2FY21.

Profit declined due to last year one time gain of Rs 9019 crore . During the previous year, GRUH Finance Limited (GRUH), an associate company, was merged with Bandhan Bank effective October 17, 2019. The Corporation recorded a fair value gain of Rs 9,019.81 crore through the Statement of Profit and Loss during the quarter ended December 31, 2019 on derecognition of investment in GRUH.
HDFC’s consolidated net profit, attributable to the owners, however, came in at Rs 5,176.76 crore for the quarter under review, clocking an improvement of 35% on year, from Rs 3,835.38 crore reported in Q3FY20.
The HDFC group firm’s pre-tax profit came in at Rs 3,752.54 crore, down 58.95% YoY, from Rs 9,143 crore, while it increased 6.2% QoQ from Rs 3,532 crore.

HDFC’s profit for the quarter ended December 31, 2020 should not be directly compared with that of the previous year as it included profit on sale of part stake in HDFC Life and dividend (worth Rs 159 crore); net gain on fair value changes and income on loans assigned (worth Rs 641 crore); and charge for employee stock options (worth Rs 147 crore).
Revenue from the operations came in at Rs 11,707 crore for the quarter under review, as compared to Rs 20,285.47 crore in the corresponding quarter of the previous fiscal. This included Rs 157 crore income via sale on investments, and an income from derecognised/assigned loans worth Rs 410.28 crore.
The net interest income (NII) increased 23.4% YoY to Rs 4,068 crore for Q3 of Fy21, up from Rs 3,296.7 crore reported in Q3FY20.

The spread on loans over the cost of borrowings for the nine months ended December 31, 2020 was 2.28%. The spread on the individual loan book, on the other hand, was 1.94% and on the non-individual book was 3.14%. Overall, the net interest margin (NIM) for the nine months ended December 31, 2020 stood at 3.4%.
HDFC overall collection efficiency ratios for individual loans have improved, nearing pre-Covid levels.
The gross non-performing loans as at December 31, 2020 stood at Rs 8,012 crore, translating to gross NPA ratio of 1.67%. down from 1.81% at the end of the September quarter. The non-performing loans of the individual portfolio stood at 0.79% while that of the non-individual portfolio stood at 4%. The quarter also saw resolutions in certain non-individual loans.

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