How did HDFC report such good profit growth in a tough quarter in Dec-21 quarter?
Answer
Answer
Before we get into the bottom line story, let us look at top line of HDFC first. For the Dec-21 quarter, HDFC revenues fell by -20.28% at Rs.31,298 crore. Sequential revenues were also lower, largely on account of losses on investments in the life insurance business compared to investment gains of Rs.10,044 crore in the Dec-20 quarter. Core income from lending and life insurance premiums were higher yoy. 9-month NII was up 14% at Rs.12,519 crore.
HDFC Ltd
Rs in Crore
Dec-21
Dec-20
YOY
Sep-21
QOQ
Total Income (Rs cr)
₹ 31,298
₹ 39,259
-20.28%
₹ 38,591
-18.90%
PBT (Rs cr)
₹ 7,121
₹ 6,811
4.55%
₹ 6,779
5.03%
Net Profit (Rs cr)
₹ 5,837
₹ 5,177
12.75%
₹ 5,258
11.01%
Diluted EPS (Rs)
₹ 31.79
₹ 28.74
₹ 28.80
PBT Margin
22.75%
17.35%
17.57%
Net Margins
18.65%
13.19%
13.63%
During the Dec-21 quarter, net interest margins or NIMs for first nine months of FY22 stood at 3.6% while credit costs were sharply lower at 0.27%, which is what boosted profits. Cost to income ratio for first 9 months of FY22 were flat at 8.1%. PBT margins improved from 17.35% in Dec-20 quarter to 22.75% in the Dec-21 quarter. Even on a sequential basis, the PBT margins were higher.
Net profits for Dec-21 quarter was up 12.75% at Rs.5,837 crore on a yoy consolidated basis due to robust operating performance getting transmitted. Collection efficiency stood at 98.9%. However, gross NPLs for the individual loans business stood at 1.44% while the gross NPLs of the non-individual business was much higher at 5.04%. The latter is the segment that caters predominantly in the form of loans given to builders and developers.
PAT margins for the Dec-21 quarter at HDFC consolidated group level improved from 13.19% in the Dec-20 quarter to 18.67% in Dec-21 quarter. PAT margins were also sharply higher on a sequential basis by over 500 bps.