HDFC Ltd posted a mixed quarter, with Net interest income growing 22% yoy and healthy Net Interest margins at 3.7%. Profits at Rs 3001 crore were higher than ET NOW poll estimates due to controlled provisions however the absolute Gross NPAs were up by nearly 14% QOQ.

Individual NPAs increased due to slippages on account of the impact of the second wave of the pandemic however the management says they are not unduly concerned on the book as it is secured assets and a lot is to do with impact on collection efficiency due to Covid second wave.

Overall collection efficiency ratio for individual loans has improved for June2021 month to pre-COVID levels. HDFC ltd carries high provisions on book. Total provisions at Rs 13189cr, this is 2.64 % as a percentage of the Exposure at Default (EAD).

In an exclusive interaction with ET NOW, Keki Mistry, Vice Chairman and CEO, HDFC ltd said, we have been proactive and built up sufficient provisions over a period of time, given the uncertainty on 3rd wave we will not like to release any of the provisions, incremental provisions will depend on performance of the book. June non individual GNPA has jumped up 10bps vs March quarter and expect overall Q2 Gross NPA to be hopefully lower if there is no third wave.

Keki said, we are positive on growth, Q1 individual loan book grew at 14% yoy (loan growth gross of loans sold stood at 22% yoy) and non-individual loan book declined in Q1. Pipeline of loans is good in non individual loan segment. The demand for housing continues to remain strong and business has reverted to normalcy in the months of June and July 2021. The key risks to business remains a third wave and variants of the virus.

HDFC LTD Q1FY22 REVIEW:

1. NII at Rs 4147 cr vs Rs 3392 cr, up 22% YoY
2. PAT at Rs 3001 cr vs Rs 3051 cr YoY
3. Profit on sale of investments at Rs 263cr vs Rs 1241cr YoY
4. Dividend at Rs 16 cr vs Rs 298 cr YoY
5. Provisions at Rs 686 cr vs Rs 719cr QoQ (vs 1199cr YoY)
6. AUM at 5.74 lk cr vs 5.31 lk cr, up 8.1% YoY
7. Individual loan book up 14% YoY
8. individual loan book growth, after adding back loans sold in the preceding 12 months was 22%
9. NIM at 3.7%; Spread at 2.29%
10. GNPA at Rs 11120 cr vs Rs 9759 cr QoQ
11. GNPA at 2.24% vs 1.98% QOQ
12. Total provisions at Rs 13189cr, this is 2.64 % as a percentage of the Exposure at Default (EAD)
13. The Corporation is required to carry a total provision of Rs 5,778 crore.