HDFC Q2 net profit up 2% at Rs 2,106 crore

Mumbai: Pure-play mortgage major HDFC Monday reported a moderate increase of 2 percent in its consolidated net profit at Rs 2,106.51 crore for the quarter to September.

Vice-chairman and chief executive Keki Mistry said the bottomline was boosted by a very strong show by the life insurance business.

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Consolidated profit growth is low despite on a standalone basis the company reported 18 percent growth in profit and all the subsidiaries reported a healthy numbers.

Net profit of the life insurance business stood at Rs 215.34 crore from Rs 183.74 crore.

Profit in the general insurance was Rs 60.52 crore from Rs 36.27 crore.

The asset management subsidiary booked a profit of Rs 172.52 crore from Rs 165.94 crore.

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On standalone basis, net profit rose 18 percent to Rs 1,605 crore, primarily boosted by dividend from its banking subsidiary HDFC Bank, Mistry said.

The mortgage player provided Rs 719 crore of tax, which included Rs 83 crore as deferred tax liability on special reserves.

The net interest margin in the quarter stood at 3.95 percent as against 4 percent in the year-ago quarter.

"There is marginal decline in net interest margin despite the fact that the spread has widen compared to the previous year. The reason for this is the interest rate that is prevailing in the system," he said.

The spread on loans over the cost of borrowing for the half year, stood at 2.32 percent compared to 2.29 percent in the year-ago period.

The net interest income, including dividend, was Rs 2,501 crore, an increase of 21 percent from Rs 2,059 crore crore last year same period crore.

"The growth in NII has come from the fact that in the quarter we received dividend from HDFC Bank," Mistry said.

Gross non-performing loans stood at 0.71 percent. The non-performing loans of the individual portfolio stood at 0.53 percent while that of the non-individual portfolio stood at 1.12 percent.

The loan book stood at Rs 2,37,991 crore from Rs 2,12,344 crore last year. It sold Rs 12,969 crore of loans in the preceding 12 months.

Its total loans outstanding stood at Rs 29,125 crore

on which it got a weighted average return of 1.22 percent.

Its capital adequacy ratio after reducing the investment in HDFC Bank from tier I capital stood at 16.1 percent, of which tier I capital was 12.8 percent and tier II capital was 3.3 percent.

It received board approval for a level 1 American depository receipts (ADRs) programme in respect of up to 10 percent of the issued and paid up share capital of the corporation.

"The programme envisages conversion of existing equity shares of the corporation into ADRs and does not entail any issue of additional shares," Mistry said.

It also received shareholders nod to issue rupee denominated bonds overseas up to USD 750 million.

In August, the company had agreed to sell 9 percent of equity shares in HDFC Life to Standard Life subject to regulatory approvals.

For that 9 percent the application has been made to FIPB recently and also Irda has come out with some changes that are required in the shareholders agreement, which is being worked on, Mistry said.

"Once this transaction is complete, we will look at the IPO. Therefore, an IPO will not happen in 2015 for sure but somewhere in the middle of 2016," he said.

Commenting on the numbers, Vaibhav Agrawal of Angel Broking said the company's numbers are good despite sluggish economic environment. Overall, we expect HDFC to post a healthy CAGR of 15.3 percent over FY2015-17.

The HDFC counter ended at 2.09 percent down at Rs 1,312.85, on the BSE which closed at 27,361.96, down 0.40 percent.