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Housing finance major HDFC has reported third quarter results which are in line with market expectations. While the top line growth continues to be impressive on sustained demand growth for home loans, net interest margins remain under pressure as interest rates have inched up. Going forward, there are some signs of a slow down in home loan demand because of substantially higher real estate prices and rising interest rates. For the quarter ended 31 December 2006, net profit has increased 24.94 per cent to Rs355.49 crore, or Rs13.14 per share, from Rs284.52 crore, or Rs10.6 per share, for the previous year quarter. Total operating income increased 38.27 per cent to Rs1,454.52 crore from Rs1,051.97 crore a year ago. Total interest income went up by 41.46 per cent over the previous year quarter, but growth in interest paid was higher at 48.1 per cent. As a result, increase in net interest income was limited to 28.19 per cent over the previous year quarter. Other operating income – including fee income, interest and dividend income from investments and profit on sale of investments - increased 4.86 per cent to Rs96.13 crore from Rs91.67 crore. Operating profits, excluding other income but including other operating income, for the quarter increased 25.86 per cent over the previous year quarter. Operating margins as a percentage of operating income declined to 30.64 per cent from 33.66 per cent for the previous year quarter. Increase in staff costs was limited to 12.61 per cent while other operating expenses went up by a marginal 1.58 per cent. Other income for the quarter at Rs3.93 crore was 18.73 per cent higher than Rs3.31 crore reported for the previous year quarter. Tax provisions at Rs88.58 crore were 30.88 per cent higher than Rs67.68 crore for the previous year quarter and contributed to lower bottom line growth. For the nine month period April – December 2006, total loan approvals were Rs22,666 crore as compared to Rs17,777 crore for the same period of previous year - a growth of 28 per cent. Actual disbursements for the same period at Rs17,465 crore were 27 per cent higher than Rs13,805 crore for the previous year period HDFC's capital adequacy ratio stood at 13.7 per cent of the risk weighted assets, as against the minimum requirement of 12 per cent, as at the end of last quarter. Tier-1 capital adequacy was 8.1 per cent as against a minimum requirement of 6 per cent. Total loan portfolio (including loans outstanding, deposits and investments in preference shares and debentures for financing real estate related projects) as at end of December 2006 was Rs54,633 crore as against Rs43,927 crore as at December 2005, an increase of 24 per cent. As at December 31 2006, total assets of HDFC stood at Rs58,888 crore as against Rs47,773 crore a year ago - an increase of 23 per cent. During the last quarter HDFC opened an office in London to market its services to non-resident Indians. HDFC also has an office in Dubai which caters to non-resident Indians in the Middle East.
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