Analysts Expect NIM To Pick Up As Rate Transmission Improves


India’s largest mortgage lender is expected to see an improvement in net interest margin as it raises lending rates in the rest of the financial year, according to analysts.

Strong loan growth and healthy provisions are other key positives for Housing Development Finance Corp. this year, they said in their post-earnings research reports.

HDFC reported net profit worth Rs 3,669 crore for the quarter ended June, up 22% year-on-year, even as core income grew slower than expected. The earnings, however, missed the consensus estimate of Rs 3,883.5 crore. Its net interest income for the quarter rose 7.8% from a year ago to Rs 4,447 crore. Assets under management rose 17% to Rs 6.71 lakh crore.

After the sale of loans, HDFC’s total advances portfolio stood at Rs 5.81 lakh crore as on June 30.

  • Individual loans, excluding the loans sold, were at Rs 4.47 lakh crore, up 19% year-on-year.

  • Non-individual loans on the book rose 4.7% to Rs 1.28 lakh crore.

The home financier’s asset quality improved during the period. Its gross non-performing asset ratio fell 13 basis points sequentially to 1.78%. Credit costs remained stable at 0.33% quarter-on-quarter.

The company’s expected credit loss charged to the statement of profit for the quarter stood at Rs 514 crore, down 25% from a year earlier.

All the 29 analysts tracking HDFC recommend a ‘buy’, according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 23.8%.


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