HDFC Q4 net profit up 16% as lending operations grow, NII rises 14%

Mortgage lender Housing Development Finance Corporation (HDFC) reported a net profit of ₹3,700 crore in the quarter ended March 2022, up 16% year-on-year compared with ₹3,180 crore in the corresponding quarter of the previous fiscal.

Net interest income (NII), the difference between interest earned and interest expended, grew 14% during the quarter under review to ₹4,601 crore, compared with ₹4,027 crore in Q4 FY21. Net interest margin (NIM) at the end of the quarter under review was 3.5%.

Profit after tax (PAT) for the year ended March 31, 2022 stood at ₹ 13,742 crore, compared with ₹12,027 crore in the previous year. The NII for the entire financial year stood at ₹ 17,119 crore, as opposed to ₹ 14,970 crore in the previous year, representing a growth of 14%.

The rise in net profit was on account of growth in lending operations. HDFC notes that its highest monthly individual disbursements ever were recorded in March 2022. This came to be despite the concessional stamp duty benefits during the previous year in certain states that were revoked in the current year.

“The demand for home loans and pipeline of loan applications continues to remain strong. Growth in home loans was seen in both, the affordable housing segment as well as in high end properties. The increasing sales momentum and new project launches augur well for the housing sector,” HDFC says in an exchange filing.

Of the new loan applications, 91% were received through digital channels. For the quarter ended March 31, 2022, the average loan size was ₹34.7 lakh. During the year ended March 31, 2022, the average size of individual loans stood at ₹33 lakh, against ₹29.5 lakh seen in the previous year.

The assets under management (AUM) increased to ₹6,53,902 crore at the end of March 2022, compared with ₹5,69,894 crore in the previous year. During the quarter ended March 31, 2022, the lender assigned individual loans to the tune of ₹8,367 crore, compared with ₹ 7,503 crore in the same quarter of the previous year.

Individual loans sold in the preceding 12 months amounted to ₹28,455 crore, against ₹ 18,980 crore in the previous year. HDFC also assigned standard, non-individual loans amounting to ₹1,500 crore during FY22.

Meanwhile, collection efficiency for individual loans stood at over 99% during the March quarter. At the end of the quarter, the gross individual non-performing loans (NPLs) stood at 0.99% of the individual portfolio, while the gross non-performing non-individual loans stood at 4.76% of the non-individual portfolio.

The gross NPLs as at March 31, 2022 stood at ₹10,741 crore. This is equivalent to 1.91% of the portfolio, HDFC informs in its filing.

As at March 31, 2022, HDFC carried a total provision of ₹13,506 crore. The provisions carried as a percentage of the Exposure at Default (EAD) is equivalent to 2.38%. Expected credit loss (ECL) charged to the statement of profit and loss for FY22 came down to ₹1,932 crore from ₹2,948 crore in FY21. Credit costs for the year ended March 31, 2022 stood at 33 basis points, substantially lower from 56 basis points registered in the previous year.

On the impact of Covid-19, HDFC says the loans restructured under the RBI’s Resolution Framework for Covid-19 related stress was equivalent to 0.80% of the loan book. Of these restructured loans, 98% are individual loans and 2% are non-individual loans. The largest account restructured under the resolution framework of ₹2,764 crore was fully repaid as at March 31, 2022.

The board of HDFC also recommended a dividend of ₹30 per share of face value of ₹2 each for the financial year ended March 31, 2022. The dividend pay-out ratio stands at 40%. The dividend will be paid to shareholders from July 1, 2022 onwards. The record date for determining the entitled shareholders is June 1, 2022.