HDFC Q4 Net Rises 20%, Expects Merger With HDFC Bank To Be Over By July

New Delhi: Mortgage major HDFC on Thursday reported a 20 per cent increase in its profit after tax for the January-March quarter at Rs 4,425 crore. Its vice chairman and chief executive Keki Mistry said that the company expects the USD 40 billion merger with HDFC Bank to be completed by July this year.

For FY23, its standalone profit after tax grew 18 per cent to Rs 16,239 crore. In the reporting quarter, its core net interest income grew 16 per cent to Rs 5,321 crore on the back of an expansion in the net interest margin to 3.7 per cent and a 24 per cent growth in individual loans.

Mistry said the NII has been impacted because of the RBI's rate hikes, wherein the cost of liabilities rose faster as compared to the yield on advances resulting in an impact on interest incomes. On a call with analysts, Mistry said that the company is carrying an excess statutory liquidity ratio, with the overall investments in government securities being 128 per cent of the requirements. It can be noted that the excess investments will come in handy for the merger, which will increase the investment requirements.

He said the merger the largest in India's corporate history - will be completed by July this based on the current progress. Replying to a question on the way forward for warrant holders after their expiry in August, Mistry said the holders will get shares of HDFC Bank instead of HDFC in the same proportion as the merger ratio.

HDFC will engage with RBI to find a better-suited way out on its fully-owned educational loans subsidiary Credila Financial Services, Mistry said, adding that a variety of people have approached it evincing interest to invest following the central bank's decision to get the stake in the entity down to 10 per cent post the merger.

Mistry said a final solution on Credila will be out by the end of June. HDFC has monthly repayment commitments of Rs 10,000-15,000 crore on its borrowings and is reducing its dependence on corporate deposits in favour of the stickier individual deposits, Mistry said.

It will also be seeking clarity on the long-term infra bonds treatment from the RBI, Mistry said. On the asset quality front, the company reported a significant improvement in non-performing loans (NPLs), with the gross NPL ratio improving to 1.18 per cent as against 1.91 per cent in the year-ago period.

The Corporation's capital adequacy ratio stood at 24.3 per cent as of March 31, of which the core Tier I capital was 23.8 per cent and Tier II capital was 0.5 per cent. The Board of Directors declared an interim dividend for the year ended March 31, 2023, of Rs 44 per equity share of face value of Rs 2 each compared to a final dividend of Rs 30 per equity share in the previous year, HDFC said.

The lender also said for the year ended in March 2023, the consolidated profit after tax attributable to the Housing Development Finance Corporation Limited (HDFC) stood at Rs 26,161 crore, a growth of 16 per cent year-on-year.