Strong growth in home loans helped housing finance major, HDFC Ltd, post a net profit of Rs 1,142 crore for the fourth quarter ended March 31, 2010 — 23 per cent higher than the Rs 926 crore in the corresponding year-ago quarter.

The company had a one-time income of Rs 132 crore from the sale of its stake in Lafarge Cement, which boosted its profit from sale of investments to Rs 134 crore (Rs 45 crore), said Mr Conrad D'Souza, Senior General Manager, Management Services, HDFC.

The company's board has approved a dividend of Rs 9 per equity share of Rs 2 for the just ended fiscal.

Full-year performance

For the financial year 2010-11, net profit increased 25 per cent to Rs 3,535 crore (Rs 2,826 crore).

The company was able to maintain its spreads by hiking its lending rates in sync with the rise in cost of funds, said Mr D'Souza.

In the last fiscal, HDFC raised lending rates by 125 basis points.

The spread on loans over the cost of borrowings for the year stood at 2.33 per cent (2.31 per cent).

Loan approvals during the year grew 24 per cent to Rs 75,185 crore (Rs 60,611 crore) and disbursements grew 20 per cent to Rs 60,314 crore (Rs 50,413 crore).

Individual approvals grew at 25 per cent and disbursements grew by 27 per cent.

Gross non-performing loans were at 0.46 per cent of the loan portfolio (0.53 per cent).

Total provisions amounted to Rs 813 crore, of which, Rs 446 crore was in respect of housing loans under the Dual Rate Home Loan scheme.

On a consolidated basis, HDFC's net profit increased to Rs 4,528 crore (Rs 3,241 crore).

Outlook

For the current fiscal the corporation is looking at a loan growth of around 20 per cent and spreads of 2.15-2.35 per cent.

About the likely impact of the rising interest rate scenario on the demand for home loans, Mr D'Souza said that high property prices are bigger worry than rising interest rates.

“Interest rates on mortgages are still below 11 per cent, which is very good from a historical perspective. We don't see demand getting affected,” he said.

HDFC normally allows 15-20 years for repayment. Given that the monthly repayments or EMIs will increase following a rise in lending rates, the company ensures that the tenure does not extend beyond the borrowers' retirement age, he added.

HDFC is likely to decide on its rate revision some time next week, Mr D'Souza said.

The company would raise about Rs 20,000 crore through market borrowing this year. The outstanding debentures as on March 31, 2011, are about Rs 48,000 crore, he added. Shares of HDFC closed at Rs 661.65 on the BSE on Tuesday, down 0.37 per cent from the previous close of Rs 664.10.

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