HDFC, the country's largest housing finance company, has reported a net profit of Rs 1,605 crore for the quarter ended September 2015 - an increase of 18% over Rs 1,361 crore in the year-ago period. HDFC reported strong growth in individual loans, which has resulted in the share of wholesale loans coming down.
It has received approval from its board to raise $750 million through the issue of dollar-denominated bonds.
VC and CEO Keki Mistry said that the loan growth was driven largely by first-time home buyers. "In India, there is a strong structural demand because we have a young population with 60% below 30 years of age. At HDFC, We have seen that the average age of the customer when they take their first loan is between 35 and 38." he said.
According to him, the outlook for home loans has improved. "We are looking at lower inflation and there is scope for the RBI to cut rates even now. We have passed on whatever reduction in cost of borrowing our balance sheet has seen. We are seeing a decline in cost of funds on an incremental basis and any reduction in cost of funds will improve our ability to cut rates," said Mistry.
Commenting on the lower net interest margin, Mistry said that in terms of borrowed funds, the spreads have gone up three basis points. "But the second element in net interest margin is the Rs 34,000 crore of shareholder funds. These shareholder funds earn interest rates prevailing in the system, which have come down by 1.5 percentage points. But this is not a reflection of the lending operations where spreads have improved," said Mistry.
It has received approval from its board to raise $750 million through the issue of dollar-denominated bonds.
VC and CEO Keki Mistry said that the loan growth was driven largely by first-time home buyers. "In India, there is a strong structural demand because we have a young population with 60% below 30 years of age. At HDFC, We have seen that the average age of the customer when they take their first loan is between 35 and 38." he said.
According to him, the outlook for home loans has improved. "We are looking at lower inflation and there is scope for the RBI to cut rates even now. We have passed on whatever reduction in cost of borrowing our balance sheet has seen. We are seeing a decline in cost of funds on an incremental basis and any reduction in cost of funds will improve our ability to cut rates," said Mistry.
Commenting on the lower net interest margin, Mistry said that in terms of borrowed funds, the spreads have gone up three basis points. "But the second element in net interest margin is the Rs 34,000 crore of shareholder funds. These shareholder funds earn interest rates prevailing in the system, which have come down by 1.5 percentage points. But this is not a reflection of the lending operations where spreads have improved," said Mistry.
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