HDFC Q4 results: Net profit rises 16% to Rs 3,700 cr, final dividend declared

The country's largest mortgage lender HDFC Ltd on Monday reported 16 per cent year-on-year rise in its standalone net profit at Rs 3,700 crore for the quarter ended 31 March, 2022. The company had reported a net profit of Rs 3,180 crore for the year-ago period.

The total revenue from operations increased 5 per cent to Rs 12,300 crore in the quarter under review as against Rs 11,697 crore in the same quarter last fiscal, the Housing Development Finance Corporation (HDFC) said in a regulatory filing. 

HDFC's net interest income (NII) increased 14 per cent to Rs 4,601 crore compared to Rs 4,027 crore in the previous year.

Meanwhile, the company's board of directors has recommended a dividend of Rs 30 per equity share of face value of Rs 2 each for the financial year 2021-22. The dividend pay-out ratio is 40 per cent. 

During the year ended March 31, 2022, individual approvals and disbursements grew by 38% and 37% respectively compared to the previous year.

HDFC also stated that in the month of March, the corporation recorded its highest monthly individual disbursements ever. "This is despite the fact that the previous year entailed concessional stamp duty benefits in certain states which were not there in the current year," it added.

The demand for home loans and pipeline of loan applications continues to remain strong, it said, adding that 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 augurs well for the housing sector."

HDFC also said that 91 per cent of new loan applications were received through digital channels.

In the fourth quarter of the financial year under review, the non-individual loan book recorded a growth, with a good pipeline of loans from lease rental discounting and construction finance. 

During the year ended March 31, 2022, the average size of individual loans stood at Rs 33 lakh. For the quarter ended March 31, 2022, the average loan size was Rs 34.7 lakh, the company added. 

As on March 31, 2022, the company's assets under management (AUM) increased 14.74 per cent to Rs 6,53,902 crore as against Rs 5,69,894 crore in the previous year. Individual loans comprise 79 per cent of the AUM. On an AUM basis, the growth in the individual loan book was 17 per cent.

COVID-19 impact: 

As of March 31, 2022, loans restructured under the RBI’s Resolution Framework for COVID-19 Related Stress (OTR 1.0 & 2.0) was equivalent to 0.80 per cent of the loan book. Of the loans restructured, 98 per cent are individual loans and 2 oer cent are non-individual loans. 

HDFC added that the largest account restructured under the resolution framework of Rs 2,764 crore was fully repaid.
Loans approved under the Emergency Credit Line Guarantee Scheme stood at Rs 2,216 crore of which, 79 per cent has been disbursed, it added.

HDFC Ltd's scrip on Monday traded 0.91 per cent higher at Rs 2,248.50 apiece on BSE post declaration of results during late trade.

Abhay Agarwal, Founder, and Fund Manager, Piper Serica, stated, "The quarterly results from HDFC Ltd. are largely in line with expectations. The company has shown a healthy improvement in all key metrics – disbursement, net interest margin, credit cost, asset quality, and dividend payout ratio. However, in an environment of deteriorating credit quality analysts are going to closely look at the adequacy of provisioning even when HDFC has disclosed the NPLs as per RBI norms. The potential impact of higher provisioning over the next 12 months will keep the analysts on the cautious side. The higher cost of borrowing will depress the escalated net interest margins. We expect the demand for home mortgages to remain robust but at the same time, there is aggressive competition from PSU banks and well-funded NBFCs."

In a surprise announcement on April 4, HDFC bank said its parent company HDFC Ltd will be merged into it in about 18 months and the combined balance sheet will reach Rs 17.87 lakh crore. HDFC Ltd has total assets under management of Rs 5.26 lakh crore with a market capitalisation of Rs 4.44 lakh crore, while HDFC Bank is the largest private sector lender by assets size with a market capitalisation of Rs 8.35 lakh crore.

Under the proposed merger deal, shareholders of HDFC Ltd will receive 42 shares of HDFC Bank (face value Re 1 each) for 25 shares of HDFC Ltd (face value Rs 2 each).

Also, the subsidiary/associates of HDFC Ltd will come under the bank post the amalgamation process.

HDFC Bank had said the merger is the logical next step as the scale, growth track record, and profitability of both organizations have strengthened over the last two decades.

''Regulatory convergence and market developments over time have improved the risk-reward equation,'' it added.