HDFC’s quarterly net profit rises 12% on strong loan growth

HDFC’s quarterly net profit rises 12% on strong loan growthAssisted by higher growth in home loan business, private-sector mortgage lender HDFC reported a year-on-year increase of 12 per cent in its quarterly net profit.

HDFC said in a statement that its net profit jumped to Rs 12.8 billion in the three months ended December 31, 2013; from Rs 11.4 billion in the corresponding three-month period of the previous year.

The lender's earnings from operations jumped 16.3 per cent to Rs 59.85 billion in quarter under review.  But profit on sale of investments slipped to Rs 346 million from Rs 963 million in the year ago period.

Driven by interest charges, total expenditure jumped nearly 15 per cent on yearly basis in the third quarter of current financial year.  Net interest margin for the first nine months of the current financial year slipped from 1.06 per cent to 4 per cent.

Speaking about the decline in net interest margin, HDFC Chief Executive Keki Mistry said, "But that is a natural phenomenon because as the balance sheet keeps increasing in the course of the year the growth comes from borrowed money and there is an interest cost attached to it."

As of December 31, 2013 the lender's loan book stood at Rs 192,266 crore, as against Rs 1,60,941 crore as of December 31, 2012.  After adding back loans, the growth in the individual loan book stood at 27 per cent. Individual loans accounted for nearly 89 per cent of the laon book's incremental growth in the nine months ended December 31.

The private-sector lender closed the December quarter with a capital adequacy ratio of 19.1 per cent, well above the minimum requirement of 12 per cent.