Key takeaways from HDFC Q3: Bad debts fail, collection efficiency increases
The largest mortgage lender in India said its profit figure which was comparatively lower for the third quarter was not comparable due to a one-time gain last year. But net interest income, which is comparable, rose 26%, which analysts called decent.
Here are the main takeaways from the HDFC Q3 show:
Adjusted earnings up 27%
The pre-tax profit reported for the quarter was Rs 3,753 crore compared to Rs 9,143 crore the previous year, but the figures are not comparable as the mortgage lender made an exceptional gain from the sale of its stake in Gruh Finance.
For comparison, adjusted profit before tax for the quarter is Rs 3,694 crore, up from Rs 2,908 crore the previous year, a growth of 27%.
Ticket size increases
The average size of individual loans disbursed during the nine months ended December was Rs 28.5 lakh. The average loan size for the quarter ended December 31 was higher, at Rs 30 lakh.
Assets under management increase by 9%
Assets under management (AUM) loans amounted to Rs 5.52,167 crore against Rs 5.05,401 crore the previous year. Individual loans represent 76 percent of assets under management. The portfolio of individual loans on the basis of assets under management increased by 10 percent and the portfolio of non-individual loans increased by 7 percent. Growth in total assets under management was 9%.
Collection efficiency increases
Overall, collection efficiency ratios for individual loans have improved, approaching pre-Covid levels. The recovery efficiency of individual loans in December 2020 was 97.6% compared to 96.3% in September 2020.
In accordance with regulatory standards, gross non-performing loans as of December 31, 2020 amounted to 1.67%. Bad debts in the individual portfolio amounted to 0.79%, while those in the non-individual portfolio were 4%. The numbers were lower due to the Supreme Court order not to recognize NPAs. However, the company said that despite the order, non-performing loans would have been higher at 1.91 percent of the loan portfolio; with individual 0.98% NPLs and 4.35% non-individual NPLs.
1/3 of loans to EWS
In the nine months ended December 31, 34% of approved home loans by volume and 17% by value were made to clients in the Economically Weaker Section (EWS) and Low Income Groups (LIG ). The average home loan to EWS and LIG segments was Rs 10.7 lakh and Rs 18.5 lakh, respectively.
Analyst take
“I think that’s a decent set of numbers. In fact, they have also indicated that there is good traction in the individual home loan segment and we are seeing the same and feedback from management has already indicated that this quarter is going to be great for them as well, ”he said. said Saurabh Jain of SMC Global Services.