Even as the growth in bank lending to the housing segment has been slowing, market leader HDFC continues to deliver steady growth in its retail loan book. The company’s leadership position and focus on the first-home buyer and salaried class, have been key reasons for its healthy growth in the last couple of years.

Retail loans (including sale of loans to HDFC Bank) have grown 23 per cent in the latest June quarter, despite the headwinds in the property market. Also, the growth appears to have mainly been driven by volumes. HDFC’s average loan size has more or less remained steady — it stood at ₹26.3 lakh as of June 2017. Healthy growth in retail loans, steady margins and low delinquencies have kept the company’s earnings in good stead, with net interest income delivering a 16 per cent growth in the June quarter.

In the June quarter of last year, HDFC had sold shares of HDFC Ergo for ₹922 crore and had also created a one-time special provision of ₹275 crore as a charge to the P&L account. Excluding this transaction, it has reported a 15 per cent growth in profit before tax in the June quarter.

Non-retail inches up Aside from the healthy growth in retail loans, HDFC’s non-retail segment too has been picking up in recent quarters. The growth has been led by lease rental discounting — loan against future rental receipts from lease contracts with corporate tenants. The growth in non-retail loans which inched up to 17 per cent in the December and March quarters, has risen further to 22 per cent in the latest June quarter.

HDFC’s ability to maintain low level of delinquencies over the years has been a key positive.

The gross non-performing assets (GNPA) in the June quarter, marginally went up to 1.12 per cent of loans from 0.79 per cent in the March quarter.

HDFC has an exposure of ₹909 crore in one of the accounts referred by the RBI under the bankruptcy code. The company has stated that it has adequately provided for this account. Excluding this account, the company’s GNPA would have stood at 0.8 per cent of loans in the June quarter.

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