HDFC Ltd Q3 Results

Let us look at the top line of HDFC first and foremost. For the Dec-21 quarter, HDFC Ltd reported a sharp -20.3% fall in total revenues at Rs.31,298 crore on a consolidated YoY basis. The top line took a major hit in the quarter on the insurance business as the gains on investments in life insurance dipped from a net gain of Rs10,044cr to a net loss of Rs-306cr in the quarter. Revenues from general insurance business was also lower.

The lending business was robust overall. As a result, the income from the core home loan lending business was up and even in the life insurance business premiums were sharply higher on a YoY basis. The net interest income or NII for the first nine months of fiscal FY22 was 14% higher at Rs.12,519 crore. On a sequential basis, the revenues were once again sharply lower by -18.9% largely due to the investment factor.

Let us now turn to the operating profits or the pre-tax profits of HDFC Ltd. For the Dec-21 quarter, pre-tax profits were up on a YoY basis by 4.55% at Rs.7,121 crore. During the quarter, HDFC witnessed net interest margins or NIMs at 3.6% while the all-important credit costs were sharply lower at 0.27% in tune with falling yields in the market.

As a result, the cost to income ratio for the first nine months of the fiscal stood neutral at 8.1%, which is an extremely comfortable level to be in for a housing finance company.  PBT margins improved very sharply from 17.35% in Dec-20 quarter to 22.75% in the Dec-21 quarter. Operating margins were also sharply up on a sequential basis of Sep-21 quarter.

Now we turn to the bottom line. The net Profits for the Dec-21 quarter was up 12.75% YoY at Rs.5,837 crore. This was largely due to the robust operating performance getting transmitted to the bottom line of HDFC. HDFC reported collection efficiency of 98.9%, which is fairly impressive for a company of that size. 

On a slightly discordant note, the gross NPLs for the individual loans business stood at 1.44% but gross NPLs of the non-individual business was much higher at 5.04%. The latter is the segment predominantly comprising of loans given to builders and developers.

PAT margins improved from 13.19% in the Dec-20 quarter to 18.67% in Dec-21 quarter. The PAT margins were also sharply higher sequentially. Overall, asset quality has weakened in the quarter.