Performance Highlights
- Profit before dividend, sale of investments and tax increased 17% to ` 5,245.13 crore for the nine months ended December 31, 2014
- Standalone Net Interest Margin for the nine months ended December 31, 2014 at 3.93%, Spread on loans at 2.31%
- 23% growth in the individual loan book (after adding back the loans sold in the preceding 12 months)
- Gross non-performing loans reduced to 0.69% of the loan portfolio as at December 31, 2014 compared to 0.77% in the previous year
The Board of Directors of Housing Development Finance Corporation Limited (HDFC) announced its unaudited standalone financial results for the third quarter of the financial year 2014-2015, following its meeting on Thursday, January 29, 2015 in Mumbai. The accounts have been subject to a limited review by the Corporation’s statutory auditors in line with the regulatory guidelines.
STANDALONE FINANCIAL RESULTS Financials for the Nine-months ended December 31, 2014 For the nine months ended December 31, 2014, the profit before dividend, sale of investments and tax stood at ` 5,245.13 crore as compared to ` 4,501.83 crore in the corresponding period of the previous year, representing a growth of 17%.
The profit after tax excluding the impact of Deferred Tax Liability (DTL) on the Special Reserve stood at ` 4,372.71 crore as compared to ` 3,717.14 crore in the corresponding period of the previous year, representing a growth of 18%.
The Corporation creates a Special Reserve through appropriation of profits in order to avail tax deduction under Section 36 (1)(viii) of the Income Tax Act, 1961. The National Housing Bank (NHB) has advised Housing Finance Companies to create a Deferred Tax Liability (DTL) on the amount transferred to the Special Reserve as a matter of prudence.
After providing ` 245 crore for the DTL on the Special Reserve, the profit after tax for the nine months ended December 31, 2014 stood at ` 4,127.71 crore, representing a growth of 11%.
Financials for the quarter ended December 31, 2014 For the quarter ended December 31, 2014, the profit before dividend, sale of investments and tax stood at ` 1,849.18 crore as compared to ` 1,646.78 crore in the corresponding quarter of the previous year.
The profit after tax excluding the impact of DTL on the Special Reserve stood at ` 1,512.78 crore compared to ` 1,277.71 crore in the corresponding quarter of the previous year, representing a growth of 18%.
After providing ` 87.29 crore for the DTL on the Special Reserve, the profit after tax for the quarter ended December 31, 2014 stood at ` 1,425.49 crore, representing a growth of 12%.
TOTAL ASSETS As at December 31, 2014 the total assets of HDFC stood at ` 2,45,895 crore as against ` 2,17,819 crore as at December 31, 2013 – an increase of 13%.
LENDING OPERATIONS As at December 31, 2014, the loan book stood at ` 2,19,951 crore as against ` 1,92,284 crore as at December 31, 2013. Loans sold in the preceding twelve months amounted to ` 8,566 crore. The growth in the individual loan book, after adding back loans sold is 23% (16% net of loans sold). The growth in the non-individual loan portfolio stood at 10%. The growth in the total loan book, after adding back loans sold is 19% (14% net of loans sold).
Of the total loan book, individual loans comprise 72%. Further, 85% of the incremental growth in the loan book during the nine months ended December 31, 2014 came from individual loans.
As at December 31, 2014, the total loans outstanding in respect of loans sold/assigned stood at ` 21,102 crore. HDFC continues to service these loans under these transactions and is entitled to the residual interest on the loans sold. The residual interest on the individual loans sold is 1.27% p.a. and is being accounted over the life of the loans.
Spreads and Net Interest Margins The spread on loans over the cost of borrowings for the nine months ended December 31, 2014 stood at 2.31%.
Net Interest Margin for the nine month period ended December 31, 2014 was 3.93%.
Non-Performing Loans Gross non-performing loans as at December 31, 2014 amounted to ` 1,517 crore. This is equivalent to 0.69% of the loan portfolio (previous year – 0.77%). The non-performing loans of the individual portfolio stood at 0.53% while that of the non-individual portfolio stood at 1.03%.
As per the National Housing Bank norms, the Corporation is required to carry a total provision of ` 1,614 crore.
The balance in the provision for contingencies account as at December 31, 2014 stood at ` 2,001 crore of which ` 515 crore is on account of non-performing loans and the balance ` 1,486 crore is in respect of general provisioning on standard loans and other provisions. This balance in the provision for contingencies is equivalent to 0.91% of the portfolio. The Corporation carries an additional provision of ` 387 crore over the regulatory requirements.
Investments As at December 31, 2014, the unrealised gains on HDFC’s listed investments amounted to ` 51,996 crore. This excludes the appreciation in the value of unlisted investments.
Sale of Shares of HDFC Standard Life Insurance Company Limited (HDFC Life) The Corporation had agreed to sell up to 1,89,51,361 equity shares of ` 10 each of HDFC Life to Azim Premji Trust at a price of Rs. 105 per share. The shares to be sold represented 0.95% of the total issued and paid-up equity capital of HDFC Life.
During the quarter ended December 31, 2014, the Corporation sold 1,19,69,000 equity shares of ` 10 each of HDFC Life. This represented 0.60% of the capital of HDFC Life. Consequently, the profit on sale of investments was ` 112.86 crore.
The balance shares were sold in January 2015.
Post conclusion of this transaction, the Corporation holds 71.42% of the total issued and paid-up equity capital of HDFC Life.
CAPITAL ADEQUACY RATIO The Corporation’s capital adequacy ratio, without reducing the investment in HDFC Bank from Tier I capital, while treating it as a 100% risk weight stood at 19.7% of the risk weighted assets, of which Tier I capital was 16.5% and Tier II capital 3.2%. The capital adequacy ratio after reducing the investment in HDFC Bank from Tier I capital stood at 17.2%, of which Tier I capital was 13.9% and Tier II capital was 3.3%. As per the regulatory norms, the minimum requirement for the capital adequacy ratio and Tier 1 capital is 12% and 6% respectively of the risk weighted assets.
DISTRIBUTION NETWORK HDFC’s distribution network spans 370 outlets, which include 97 offices of HDFC’s distribution company, HDFC Sales Private Limited (HSPL). In addition, HDFC covers additional locations through its outreach programmes. Distribution channels form an integral part of the distribution network with home loans being distributed through HSPL, HDFC Bank Limited and other third party selling associates.
To cater to non-resident Indians, HDFC has representative offices in London, Dubai and Singapore and service associates in Kuwait, Oman, Qatar, Sharjah, Abu Dhabi and Saudi Arabia.
CONSOLIDATED RESULTS The unaudited consolidated financial results for the quarter/nine months ended December 31, 2014, will be published at a later date after the approval of the unaudited quarterly financial results of HDFC Bank Limited by its Board of Directors and its subsequent approval by the Board of the Corporation/Committee of Directors duly constituted in terms of Clause 41(II) of the Listing Agreements.
To view the results, please click on the links given below: December 2014 Results Standalone December 2014 
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