HDFC says demand for home loans remains strong despite higher rates
- Consecutive interest rate hikes in May and June impacted the housing financier’s net interest income in the June quarter.
- Despite the difficult environment, the company says demand for home loans remains strong.
- The Housing Development Finance Corporation reported a 22% growth in profit after tax to ₹3,669 crore for the June quarter.
The Housing Development Finance Corporation today reported a 22% growth in profit after tax to ₹3,669 crore for the June quarter.
However, the rising interest rate environment impacted even the largest housing finance company’s net interest income for the quarter which saw two strong repo rate hikes by RBI. Due to the increase in interest rates, the housing funder has increased lending rates for all products.
“The monetary committee meetings held in May and June 2022, respectively, increased the repo rate by a total of 90 basis points. This was mainly due to uncertainties surrounding the path of inflation. As a result, there was a slight increase in interest rates, which resulted in an increase in deposit rates as well as rates on our loan products,” said Keki Mistry, CEO of Housing Development Finance Corporation, during a appeal to the results of analysts.
Net interest income and net interest margin were temporarily impacted by the mid-month rise in interest rates in May and June.
Net interest income for the quarter was ₹4,447 crore from ₹18,872.7 crore last quarter.
“During the corresponding quarter of the previous year, due to the second wave of COVID-19, there was abundant liquidity in the system and as a result overnight interest swap rates fell. at very low levels, thus increasing the NII and the net interest margin (NIM), “said HDFC
|Details (consolidated)||Q1 FY23||Q4 FY21||Q1 FY21|
|Total income||₹23,193,000||₹35,059 crore||₹30,997,000|
Loan demand remains strong
Despite the difficult environment, the company says demand for home loans remains strong.
“The demand for home loans and the loan application pipeline remain strong. Home loan growth has been seen in both the middle income segment and high end properties,” HDFC said.
Overall, individual loans make up 79% of assets under management and their average amount stood at ₹35.7 lakh compared to ₹33.1 lakh in FY22.
In fact, 92% of new loan applications were received through digital channels.
During the quarter, 23% of home loans approved in terms of volume and 10% in terms of value were granted to customers belonging to the economically weaker section and the low income group.
SEE ALSO: Explained: US Fed rate hikes, quantitative tightening and its impact on India
Small packaging drives consumers to shop more often, leading to increased frequency of purchase of FMCG brands: Kantar report