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Housing Development Finance Corp. Ltd.
Growth to Sustain
Having met with management today at our 15th Annual India Investor
Conference in New Delhi, these are some of our takeaways...
„ HDFC reiterated that it is likely to maintain its spreads of 2.1-2.2% in the
long-run by a combination of consciously changing the funding mix of its
liabilities. Marginal yield on loans is 11.7% owing to a combination of loans
sold and corporate loans and marginal cost of funds is 9.5%. HDFC also
highlighted that impact of interest rate movement on margins is negligible as
they run a good match in their ALM.
„ Contrary to the expectations, HDFC expects rates to soften over the next
one year, which would result in loan growth sustaining at +18-20%.
„ HDFC expects disbursements to continue to grow +22-23%yoy and loan
growth at +18-20%. This is likely to be led by a) increasing urbanization
leading to higher demand from tier II / tier III cities, b) HDFC gaining market
share with bank’s de-focusing- on mortgage loans due to pick up in
corporate credit demand.
„ Asset quality is not a concern despite growth ahead of system due to strong
risk management practices and systems in place. Even when banks have
seen an uptick in retail NPLs, HDFC has maintained its gross NPL at <1%
(v/s 2-3% for banks).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Housing Development Finance Corp. Ltd.
Growth to Sustain
Having met with management today at our 15th Annual India Investor
Conference in New Delhi, these are some of our takeaways...
„ HDFC reiterated that it is likely to maintain its spreads of 2.1-2.2% in the
long-run by a combination of consciously changing the funding mix of its
liabilities. Marginal yield on loans is 11.7% owing to a combination of loans
sold and corporate loans and marginal cost of funds is 9.5%. HDFC also
highlighted that impact of interest rate movement on margins is negligible as
they run a good match in their ALM.
„ Contrary to the expectations, HDFC expects rates to soften over the next
one year, which would result in loan growth sustaining at +18-20%.
„ HDFC expects disbursements to continue to grow +22-23%yoy and loan
growth at +18-20%. This is likely to be led by a) increasing urbanization
leading to higher demand from tier II / tier III cities, b) HDFC gaining market
share with bank’s de-focusing- on mortgage loans due to pick up in
corporate credit demand.
„ Asset quality is not a concern despite growth ahead of system due to strong
risk management practices and systems in place. Even when banks have
seen an uptick in retail NPLs, HDFC has maintained its gross NPL at <1%
(v/s 2-3% for banks).
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