HDFC sees over 20 pc rise in lending; Q3 net up 33 pc

Mumbai, Jan 14 (PTI) Mortgage major HDFC today said itexpects to close the fiscal with around 25 per cent spike inloan book on the back of a 33 per cent rise in Q3 net profitat Rs 891 crore, driven by higher retail sales and one-timeincome from sale of its investment in IL and FS.

"We are hopeful of clocking 20-25 per cent rise in theloan book for the full fiscal. We are also hopeful ofmaintaining a good interest spread and margins in the nextquarter. In the third quarter our interest spread stood at2.15 per cent, while net interest margin (NIM) at 4.31 percent, Housing Development Finance Corp (HDFC) vice-chairmanand chief executive Keki M Mistry told reporters here today.

Interest spread refers to the percentage differencebetween the interest rate charged on a bank loan and thelender''s cost of funds, while net interest margin (NIM) is thedifference between interest income generated by a bank and theinterest it pays to its lenders. NIM is similar in concept tonet interest spread but is the nominal average differencebetween borrowing and lending rates, and normally remainshigher than interest spread.

HDFC saw a massive 39 per cent jump in retail loandisbursals during the reporting quarter, and the overall loanbook rose 27 per cent to Rs 5,387 crore, Mistry said.

While HDFC''s Q3 interest spread stood almost unchangedat 2.15 per cent against 2.25 per cent in Q3 last fiscal, itsNIM also was nearly unaltered at 4.31 per cent in Q3 to Rs1,124 crore, a growth of 19 per cent, against 4.4 per cent inQ3 of FY10. On this Mistry said, he is not worried about loweror higher NIM as its focus is on maintaining a higher netinterest spread. .

There has also been improvement in the company''s NPA levels as it came down to 0.85 per cent from 0.94 per cent inthe same period last fiscal.

To meet the recently introduced higher provisioningnorms set by the home finance regulator National Housing Boardfor dual rate home loans, HDFC has made an additionalprovision of Rs 272 crore during Q3, Mistry said. Recently,NHB, in line with RBI action, increased the provisioningcoverage ratio of teaser loans to 2 per cent from 0.4 per centas it felt that there has been an asset bubble in the market.

Total income rose by 20.2 per cent to Rs 3,321 crore,as against Rs 2,762.2 crore in the year-ago quarter. HDFCreported a 20.6 per cent increase in its loan book at Rs1,09,051 crore at the end of December compared to Rs 90,110crore in the same period last fiscal.

During the quarter, HDFC earned a one-time income ofRs 167.22 crore from the sale of its investment in IL and FS.

In the reporting quarter, the lender had offloaded 2 per centof its stake in educational arm of IL and FS. In the samequarter last year, its other income, primarily from treasuryoperations stood at a lower Rs 51.3 crore.

During the first nine months of the fiscal, HDFC reported26 per cent rise in net profit at Rs 2,393 crore compared toRs 1,900 crore in the year-ago period. Total income during thenine months rose to Rs 9,093.2 crore against Rs 8,461.5 crore,up 7 per cent. .

Ruling out any major correction in residential prices, he said the so-called price spike is only in certain pocketsof Mumbai and Delhi, and there has not been any sharp spike inresidential property prices across the board. And even inthese two cities, the large uptick was in the premium segment.

Mistry also ruled out any fund raising in Q4 as HDFCis well-capitalised with a tier 1 capital of 13.13 per centand a tier 2 of 1.1 per cent, taking its overall CAR to 14. 2per cent, against the regulatory provision of 6 per cent.

The HDFC counter fell sharply to Rs 641.55 or 5.84 percent on the BSE, which closed 322 points or 1.68 per centtoday.