Market leader Housing Development Finance Corporation (HDFC) delivered an 18 per cent growth in net profit in the September quarter, led by dividend income received from HDFC Bank (where HDFC holds 21.6 per cent stake). Dividend income stood at ₹424 crore in the quarter, against ₹104 crore during the same quarter last year. While dividend has boosted earnings, healthy growth in loans, good asset quality and steady margins have also held the company’s performance.

From about 20 per cent two years ago, loan growth for HDFC has dipped to about 13-16 per cent in recent quarters. But this has been in line with the broad industry trend. Yet, HDFC continues to beat industry growth levels. In the last five years, HDFC’s retail loan book has grown at a rate which is at least 5 per cent above the growth of banks in this segment. In the latest quarter, while bank credit growth in the housing segment was about 17 per cent, HDFC’s retail loans (pre-sale) grew 23 per cent. For the company, the residential space has always been a steady growth segment, on the back of strong demand from the middle-income group and favourable demographics.

However, growth in the high-margin non-retail segment continues to remain subdued at 7 per cent. This segment accounts for 30 per cent of the loan portfolio. Despite this, the company was able to marginally increase its spread on loans (return on loans less cost of borrowings) to 2.32 per cent in the reporting quarter from 2.29 per cent last year.

HDFC continues to maintain a good asset quality. The gross non-performing assets in the September quarter stood at 0.71 per cent of loans — 0.53 per cent in the retail segment and 1.12 per cent in the non-retail segment.

The company also continues to maintain healthy capital adequacy at 16.1 per cent, with Tier-1 capital at 12.8 per cent.

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