HDFC net profit rises 20% in March quarter

The March quarter marked perhaps the last full financial year of standalone existence for India’s home-financing pioneer, which is being merged into the country’s most valued bank it spawned nearly three decades ago.

Net profit increased to ₹4,425 crore in the quarter ended March 2023 from ₹3,700 crore in the corresponding quarter of the previous year, led by strong loan demand from individuals.

Individual loan disbursements expanded 16% year-on-year with HDFC recording its highest ever monthly individual disbursements in March.

Total assets under management (AUM), as of March 2023, stood at ₹7.23 lakh crore up from ₹6.53 lakh crore in the previous year. Individual loans comprise 83% of AUM.

‘Could Close HDFC Credila Deal by June’
CEO Keki Mistry said the company is running down certain corporate loan exposures to ensure compliance with banking norms ahead of the impending merger with HDFC Bank. “The NCLT gave its approval of the merger in February and now we are in the process of getting the remaining regulatory approvals. At the current rate, we expect the merger to be effective sometime in July,” Mistry said in a post-earnings call.

The company has also approached the central bank to ask for permission to continue onboarding new customers in its wholly owned education finance company Credila.

HDFC will have to bring down its stake in HDFC Credila Financial Services to 10% over the next two years, and stop onboarding new customers, according to the central bank’s conditions for its merger with HDFC Bank. The Reserve Bank of India norms do not allow a bank to hold a stake in two non-banking finance companies.

Mistry, however, expressed confidence that the company will find a buyer for its stake by June.

“We are already getting calls from a variety of people, which we are closely assessing. Looking at the demand we should be able to close this transaction by June,” Mistry said.

He said the company has government security investments totalling ₹63,000 crore and a liquidity coverage ratio of 128%, which when calculated according to norms for banks comes down to 75%. However, the company is replacing its corporate deposits with long-term loans, and that could enhance its liquidity position.