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HDFC
HDFC expects banking system loan growth to decelerate from the current 22-23% to 18-
19% yoy from April 2011 because of 1) end of the fiscal year-end growth push and 2)
deposit growth not sustainable enough to maintain this level of credit growth.
The company believes that teaser loans (dual rate loans) made sense when the yield
curve was steep. It feels that since the yield curve has flattened now, these loans should
be withdrawn.
HDFC raised concerns on mortgage demand in the metros, primarily Mumbai, as house
prices are getting out of bounds for affordable-home buyers. Hence affordability is
becoming a challenge to growth. It expects prices to correct by up to 30% in the
Mumbai region (10-15% of the company's portfolio). Due a diversified portfolio, the
company has not witnessed any significant impact on its growth because of this.
HDFC witnessed low volumes in Dec 2010 and Jan 2011. However, the momentum
picked up in Feb 2011 and HDFC expects to end FY11 with ~25% YoY disbursements
growth. Although it intends to achieve 20-25% disbursements growth in FY12, property
prices and inflation remain areas of concern.
The company is confident of maintaining its spreads at 2.2-2.3% in the longer term.
Recently, the company altered its arrangement with HDFC Bank for buyback of
mortgage loans. Under the previous arrangement, the company allowed HDFC Bank to
buy back up to 70% of the loans originated by the bank. The ratio has now been reduced
to 55%, but the change is that all of it can be for priority sector lending.
The company appeared positive on the outlook for its insurance subsidiary and plans to
scale it up further.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
HDFC
HDFC expects banking system loan growth to decelerate from the current 22-23% to 18-
19% yoy from April 2011 because of 1) end of the fiscal year-end growth push and 2)
deposit growth not sustainable enough to maintain this level of credit growth.
The company believes that teaser loans (dual rate loans) made sense when the yield
curve was steep. It feels that since the yield curve has flattened now, these loans should
be withdrawn.
HDFC raised concerns on mortgage demand in the metros, primarily Mumbai, as house
prices are getting out of bounds for affordable-home buyers. Hence affordability is
becoming a challenge to growth. It expects prices to correct by up to 30% in the
Mumbai region (10-15% of the company's portfolio). Due a diversified portfolio, the
company has not witnessed any significant impact on its growth because of this.
HDFC witnessed low volumes in Dec 2010 and Jan 2011. However, the momentum
picked up in Feb 2011 and HDFC expects to end FY11 with ~25% YoY disbursements
growth. Although it intends to achieve 20-25% disbursements growth in FY12, property
prices and inflation remain areas of concern.
The company is confident of maintaining its spreads at 2.2-2.3% in the longer term.
Recently, the company altered its arrangement with HDFC Bank for buyback of
mortgage loans. Under the previous arrangement, the company allowed HDFC Bank to
buy back up to 70% of the loans originated by the bank. The ratio has now been reduced
to 55%, but the change is that all of it can be for priority sector lending.
The company appeared positive on the outlook for its insurance subsidiary and plans to
scale it up further.
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