Market leader Housing Development Finance Corporation (HDFC) delivered 12 per cent growth in net profit in the December quarter over the same period last year. This was driven by a 19 per cent increase in the loan book (pre-sale).
While the housing finance space has grown at a healthy clip over the last two years — despite the sluggishness in the economy — the pace has moderated in the last couple of quarters. From about 18-20 per cent in 2013-14, bank credit growth in this segment has dipped to about 16 per cent in recent months.
HDFC, thanks to its leadership position, continues to outperform the industry. For the company, the residential space continues to grow at a steady pace, thanks to favourable demographics and strong demand from the mid-income group. In the December quarter, HDFC’s retail loans (pre-sale) grew 23 per cent, much higher than the 16 per cent growth in bank lending to this segment. Over the last four to five years, HDFC has grown its retail loans at least 5 percentage points above the growth recorded by banks. HDFC’s average loan size in the December quarter was ₹23.2 lakh, about 6 per cent higher than last year. In the nine months ended December 2014, the spread on loans (return on loans less cost of borrowings) went up by a marginal 10 basis points over the year-ago period. While growth in the non-retail segment remains subdued at 10 per cent, some early signs of recovery in the developer segment are visible. About 15 per cent of the incremental growth in loans during the first nine months of 2014-15 has come from the non-retail segment. This compares with 11 per cent in the same period last year.
HDFC’s asset quality remains good. The gross non-performing assets as on December stood at 0.69 per cent of loans - 0.53 per cent in the retail segment and 1.03 per cent in the non-retail segment.