HDFC Q3 Results: NII Jumps 26%; Profit Surpasses Estimates

Housing Development Finance Corp.'s third-quarter profit fell as it set aside higher provisions and reported a one-time gain a year earlier. Still, earnings beat estimates.

Net profit of the nation's largest mortgage financier declined 65% year-on-year to Rs 2,926 crore in the three months ended December, according to an exchange filing. That compares with the Rs 2,712-crore consensus estimate of analysts tracked by Bloomberg.

The company, in the statement, however, said the profit for the reported quarter is not comparable with the year earlier because of five reasons:

• A one-time gain of Rs 9,020 crore last year due to the merger between Gruh Finance and Bandhan Bank.

• Net gain on fair value changes and income on loans assigned at Rs 641 crore in the reported quarter compared with Rs 209 crore a year ago.

• Charge for employee stock options worth Rs 147 crore in the October-December 2020 quarter compared with Rs 3 crore a year earlier.

• Profit on sale of part stake in HDFC Life and dividend worth Rs 159 crore compared with Rs 4 crore a year ago.

• Provisioning, including that made against Covid-19 worth Rs 549 crore in the reported quarter compared with Rs 2,955 crore a year ago.

“To facilitate a like-for-like comparison, after adjusting for the above, the adjusted profit before tax for the quarter ended Dec. 31, 2020 is Rs 3,694 crore compared with Rs 2,908 crore in the previous year, reflecting a growth of 27%.”

HDFC's net interest income rose 26% year-on-year to Rs 4,608 crore in the reported period, against the estimated Rs 3,715.5 crore.

• Assets under management for HDFC grew 9.3% over the year earlier to Rs 5.52 lakh crore.

• Individual loans on an AUM basis rose 10% and non-individual loans rose 7%. Individual loans contributed to 76% of overall AUM.

Its gross non-performing assets fell to 1.67% during the third quarter from 1.81% in the preceding three months. That, as the Supreme Court asked lenders not to classify any new account as an NPA after Aug. 31 as it heard the challenge against compound interest levied by banks during the moratorium period. Proforma, HDFC's gross NPA ratio stood at 1.91% compared with 1.83% as on Sept. 30.

As on Dec. 31, HDFC held provisions worth Rs 12,342 crore compared with the regulatory requirement of Rs 6,579 crore.

Shares of HDFC rose 3.36% after the results were announced, compared with a 2.35% gain in the benchmark Nifty 50.