Search the Internet           Tips

HDFC not seen sustaining disbursement growth

NetScribes/Pallavi Rao

In spite of a sluggish real estate market, Housing Development and Finance Corporation Ltd has clocked a 19.83 per cent increase in net profit to Rs 1.16 billion in the quarter to September 30, 2000, over the previous corresponding quarter. This is in line with the market expectations.

According to HDFC, approvals and disbursements of individual loans jumped by 55 per cent and 52 per cent respectively in the latest quarter. But for SGAsia analyst Sheshadri Sen, there are still no surprises. "Disbursement growth cannot really be sustained at a high of 52 per cent," said Sen.

In the first half of 2000-01, approvals went up by 33 per cent to Rs.31.65 billion, and disbursements went up by 32 per cent to Rs 24.8 billion, over the previous half-year. This reflects that disbursements the first quarter, usually a slack season for all financial instutions, was markedly poor for HDFC.

Hemindra Hazari, an analyst at ASK Raymond James who tracks the industry, pointed out that the net profit on sale of invesments is reported at Rs.0.46 billion for the quarter. "If this figure is lower than previous year's, it's not an encouraging sign," he said.

Net profit for the first half-year increased by 20.13 per cent to Rs.2.07 billion in the backdrop of a 22.08 per cent increase in operational income to Rs.11.36 billion. The gross mobilisation of retail deposits in the first half aggregated to Rs 12.82 billion, an increase of 65 per cent over that of the previous year's first half.

The first half's income from operations includes Rs.7.59 billion from interest on loans, Rs 0.44 billion from fees and other charges, Rs 0.72 billion as dividend income, Rs 0.46 billion from profits on the sale of invesments, Rs 0.19 billion from lease rental income, and other operating income amounting to Rs.1.97 billion.

According to Sen, "Similar growth can be expected in the second half of the year."

The interest outgo for the latest quarter has soared by 65 per cent. "It's high because of the competition, rising interest rates, and a rise in funding costs," said an analyst at HDFC Bank.

HDFC, which has incurred an expenditure of Rs 0.6 bn in acquiring HomeTrust Housing Finance and Gruh Finance in the recent past, is likely to capitalise the expense, said the HDFC Bank analyst, though he didn't rule out the possibility of amortisation over a period of time.

HDFC had bought Hometrust, an unlisted firm, from Gujarat Ambuja Cements Ltd earlier this year. Hometrust has a strong presence in eastern India and is largely in the retail segment, with loans to individuals accounting for around 98 per cent of its portfolio.

Money

Market Impact

Tell us what you think of this report