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Business News/ Companies / Company-results/  HDFC net profit rises 1% in Q1, misses estimates
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HDFC net profit rises 1% in Q1, misses estimates

Net profit, excluding those of its units, rose to Rs1,361 crore in June quarter from Rs1,345 crore a year ago

On a consolidated basis, net profit increased 17.7% to Rs2,204 crore, from Rs1,873 crore in the corresponding period last year. Photo: Hindustan TimesPremium
On a consolidated basis, net profit increased 17.7% to Rs2,204 crore, from Rs1,873 crore in the corresponding period last year. Photo: Hindustan Times

Housing Development Finance Corp. Ltd (HDFC), India’s largest mortgage financier, said fiscal first-quarter profit increased 1%.

Net profit, excluding those of its units, rose to 1,361 crore in the quarter ended 30 June from 1,345 crore in the year-ago period. A Bloomberg survey of 20 analysts had expected HDFC to post a net profit of 1,394 crore.

In a note accompanying the results, HDFC said the results in the current fiscal year cannot be compared to last year because dividend from its subsidiary HDFC Bank Ltd that was received in the first quarter of last fiscal will only be received in the second quarter this year.

HDFC Bank had declared a dividend of 8 per share, and the payment will be made in the current quarter. HDFC will receive 315 crore as dividend in the current quarter. It had received 269 crore in the first quarter of last fiscal.

On a consolidated basis, net profit increased 18% to 2,204 crore, from 1,873 crore in the corresponding period last year.

HDFC has four major subsidiaries—HDFC Bank, HDFC Standard Life Insurance Co. Ltd, HDFC ERGO General Insurance Co. Ltd and HDFC Asset Management Co. Ltd. Its main business is lending to individual home buyers and builders.

“The growth in the non-individual loan portfolio stood at 10%. The growth in the total loan book after adding back the loans sold in the preceding 12 months is 19%," the firm said in an emailed media statement.

Around 72% of HDFC’s total loan book comprises of loans to individuals with an average size of 23.4 lakh.

The loan book increased to 2.31 trillion in the June quarter, up 13.7% from 2.03 trillion a year ago, it said in the statement.

On a stand-alone basis, total income rose 9.5% to 7,058 crore from 6,447 crore a year ago.

Santosh Singh, an analyst at Societe Generale Asia Holdings India Pvt. Ltd, said the results were in line with what he had expected and that there were no real surprises in the numbers.

“Profit growth is about 16% if you do not take into account the dividend income of both years, which means the core business of the firm continues to remain strong. Other parameters of the business like non-performing assets (NPAs) and spread on loans are also strong, which means that the company is on the right track," Singh said.

Gross non-performing loans as on 30 June stood at 0.69% of the total loan portfolio, little changed from 0.7% in a year ago. For the individual loan book, gross NPAs were at 0.54%, while for loans to builders, the NPA ratio was at 1.04%, HDFC said.

The spread on loans over the cost of borrowings for the quarter ended 30 June stood at 2.31% compared with 2.29% in the corresponding quarter previous year.

Among HDFC’s other businesses, profit before tax of its life insurance company dropped 11% to 253 crore from 284 crore in June 2014. Profit from its mutual fund business, however, increased 37% to 174 crore from 127 crore in June 2014, segmental results released by the company showed.

HDFC chairman Deepak Parekh told shareholders that the company’s life insurance partner, Standard Life Plc, has indicated it will increase its stake to 35% from its current 26% in the company. Foreign companies can now own 49% in local insurance companies.

“That could open the possibility for an initial public offer for the remaining 14% (which Standard Life does not want to buy)," Parekh said.

However, vice-chairman and managing director Keki Mistry, while speaking to reporters later, said the talks with Standard Life are still ongoing and it could take anything between two and four weeks for any resolution.

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Published: 28 Jul 2015, 03:45 PM IST
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