hdfc stock price: HDFC earnings rise on loan growth and dividend income

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Housing Development Finance Corp Ltd (), India’s largest private sector mortgage financier, recorded a 22% increase in net profit thanks to demand for loans from individuals and also thanks to dividend income from subsidiaries.

Net profit rose to Rs 3,669 crore in the quarter ended June 2022 from Rs 3,001 crore the previous year, led to 66% growth in individual loan disbursements, the highest disbursements ever recorded for HDFC in the first quarter of any year to date.

Assets under management (AUM) rose to Rs 6.71 lakh crore from Rs 5.74 lakh crore in the previous year. Individual loans represent 79% of HDFC’s assets under management and grew 19% year-over-year.

Dividend income increased to Rs 687 crore from a mere Rs 16 crore last year, mainly because unlike last year, the majority of the company’s subsidiaries paid dividends in the first quarter.

the largest of the subsidiaries is the only one that did not pay a dividend in the first quarter.

Strong dividend income masked a sharp drop in net gains on fair value changes which plunged to just Rs 8 crore from Rs 402 crore a year ago. CEO Keki Mistry said the decline in fair value gains was due to stock market volatilities.

Robust individual loan growth and high dividend income masked a decline in HDFC’s net interest margin (NIM), which fell to 3.4% in June 2022 from 3.7% a year ago. year.

Mistry said interest rate hikes by the Reserve Bank of India (RBI) had an impact on both NIM and net interest income, but the impact will be transitory as the company has was able to pass on the full 90 basis point hike to its customers. One basis point is 0.01 percentage point.

“We are also repricing incremental loans monthly now versus every three months prior, which will accelerate the transmission of rate increases and improve margins,” Mistry said.

The company’s borrowing costs fell to 0.33% of loans from 0.50% a year ago as asset quality improved.

Total NPLs fell to 1.61% of loans from 2.24% the previous year. Considering the new RBI asset classification standards, the total NPA was 1.78% in June 2022.

HDFC was carrying a total provision of Rs 13,328 crore at the end of June. The company is in the process of raising a three-year international loan for on-lending in the affordable housing segment after the RBI raised the External Commercial Borrowing (ECB) limit to $1.5 billion from $750 million earlier this month.

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