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Nirmal Bang Report
Housing Development Finance Corporation Ltd. reported strong numbers for Q4 FY23 with the profit after tax growing by ~20% YoY, coming in above our estimate on the back of margin expansion and stable credit cost.
Assets under management growth came in at 3.2% QoQ (10.7% YoY), largely driven by retail loans (on the back of healthy disbursements), which grew by 4.5% QoQ (16.3% YoY) while non-individual loans declined by 2.5% QoQ (10.4% YoY).
Non-individual book has been shrinking as HDFC has been running down the book to ensure compliance with banking norms. Net interest income grew by 16.6% YoY as calculated net interest margin expanded by 13 basis points YoY to 3.35%.
Operating profit increased by 16.2% YoY to Rs 58.4 billion while provisions increased at a slower pace of 9.2% YoY, resulting in profit after tax growing by 19.6% YoY to Rs 44.3 billion.
Overall, asset quality was largely stable, with gross stage 3 book at 1.44% versus 1.49% in Q3 FY23. Annualized credit cost stood at 25 bps and the management expects it to normalise to pre-Covid level.
Moreover, HDFC has indicated that the cumulative collection efficiency for FY23 in individual loans stood at ~99%. The management also indicated that housing demand is likely to remain healthy as the economic momentum remains strong.
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