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HDFC Ltd
Little impact of prepayment charges. HDFC repeated its confidence that the
abolition of prepayment charges would not significantly impact its model. The
new criteria of equalized rates for new and old borrowers is an impediment to
potential acquirers, and HDFC's own income from prepayment charges has been
minuscule. Management pointed out that the levy of prepayment charges had
significantly dwindled over time (with the rising share of floater loans) and the
abolition was not a major event.
Loan demand remains robust. HDFC has seen very little weakness in demand, in
the customer segments that it operates in. There has been some softness in the
high-ticket segments (like south Mumbai) but HDFC's exposure is quite minimal
here. The key drivers of their demand - incomes and stable employment outlook -
remain in place. Rising property prices and high interest rates are a dampener, but
haven't acted as a serious demand destroyers. HDFC's loan growth target of
~20% remains in place.
HDFC has again demonstrated one of its key competitive strengths in FY12-
funding flexibility. It has almost stopped borrowing from banks (the net outstanding has actually shrunk in 1h12) and switched to market borrowings and
retail deposits. This cushions HDFC's margins in a high rate environment, a
flexibility that other non-bank lenders in India rarely demonstrate.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
HDFC Ltd
Little impact of prepayment charges. HDFC repeated its confidence that the
abolition of prepayment charges would not significantly impact its model. The
new criteria of equalized rates for new and old borrowers is an impediment to
potential acquirers, and HDFC's own income from prepayment charges has been
minuscule. Management pointed out that the levy of prepayment charges had
significantly dwindled over time (with the rising share of floater loans) and the
abolition was not a major event.
Loan demand remains robust. HDFC has seen very little weakness in demand, in
the customer segments that it operates in. There has been some softness in the
high-ticket segments (like south Mumbai) but HDFC's exposure is quite minimal
here. The key drivers of their demand - incomes and stable employment outlook -
remain in place. Rising property prices and high interest rates are a dampener, but
haven't acted as a serious demand destroyers. HDFC's loan growth target of
~20% remains in place.
HDFC has again demonstrated one of its key competitive strengths in FY12-
funding flexibility. It has almost stopped borrowing from banks (the net outstanding has actually shrunk in 1h12) and switched to market borrowings and
retail deposits. This cushions HDFC's margins in a high rate environment, a
flexibility that other non-bank lenders in India rarely demonstrate.
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