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HDFC Q4 profit takes a hit as NPAs, provisions spike & other key takeaways

The loan book of the company grew 11 per cent during the year to Rs 4.51 lakh crore.

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Last Updated: May 25, 2020, 04.33 PM IST
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Thanks to the reduced rate of corporate taxes, the company’s tax expenses came down to Rs 460 crore during the March quarter from Rs 829 crore a year ago.
NEW DELHI: India’s largest mortgage lender HDFC on Monday reported a spike in bad loans and hence provisions that led to a profit fall of 22 per cent to Rs 2,233 crore for the quarter ended March 2020.

The company also faced disruptions in the recovery of loans due to the nationwide lockdown. It said as of date, 26 per cent of the loans have opted for the moratorium. Individual loans under moratorium account for 21 per cent of the portfolio.

Here are key takeaways from the quarterly and full-year earnings:

Loan book up 11%
The loan book of the company grew 11 per cent during the year to Rs 4.51 lakh crore, which comprised 76 per cent of the total asset under management of the company. The company said loan approval grew 14 per cent in volume terms and 12 per cent in value terms. Disbursement rose by 7 per cent while the average loan size stood at Rs 27 lakh.

NPA spikes
The gross non-performing loans as of March 31, 2020, stood at Rs 8,908 crore. This is equivalent to 1.99 per cent of the loan portfolio. The non-performing loans of the individual portfolio stood at 0.95 per cent while that of the non-individual portfolio stood at 4.71 per cent.

In comparison, last year GNPA for the quarter was at 1.18 per cent of the assets. Individual gross NPAs came in at 0.70 per cent, while non-individual NPA stood at 2.34 per cent.

Provisions at Rs 11k crore
HDFC showed expenses of Rs 1,274 crore for impairment on financial instruments in the January to March period against Rs 398 crore in the same quarter last year.

The company said it has made provisions of Rs 10,988 crore as of March 31. This is Rs 6,800 crore over and above the regulatory requirement. The provisions carried as a percentage of the Exposure at Default (EAD) is equivalent to 2.44 per cent.

Lockdown disruptions hit recovery
Retail loan disbursements were disrupted in the latter half of the month of March, the company said. It said 3 per cent of its borrowers pay their monthly installments via offline mode, where follow-ups would have otherwise been done through personal visits but was not possible owing to the national lockdown.

“Recovery efforts were hampered in the latter half of March 2020, which resulted in an increase in individual non-performing loans,” it added.

NII grows 14%
For the quarter ended March 31, the net interest income (NII) stood at Rs 3,564 crore compared with Rs 3,139 crore in the corresponding quarter of the previous year, representing a growth of 14 per cent. Inclusive of fees and income from assigned loans, the NII for the quarter ended March 31, 2020, stood at Rs 3,780 crore compared with Rs 3,238 crore in the previous year, representing a growth of 17 per cent

Loans to EWS a third of its asset base
During the year ended March 31, 2020, 36 per cent of home loans approved in volume terms and 18 per cent in value terms have been to customers from the Economically Weaker Section (EWS) and Low Income Groups (LIG).

The corporation said, on an average, it has been approving 9,640 loans on a monthly basis to the EWS and LIG segment, with monthly such average approvals at Rs 1,589 crore

Tax outgo comes down sharply
Thanks to the reduced rate of corporate taxes, the company’s tax expenses came down to Rs 460 crore during the March quarter from Rs 829 crore a year ago.
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