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HDFC’s leadership position in the housing finance market, a predominantly first home buyer and salaried class target segment, negligible exposure to the riskier loan against property (LAP) segment and sound fundamentals have held the company in good stead in recent quarters.
The March quarter performance has been no different. While there has been a transitory impact of demonetisation resulting in subdued disbursement growth in the December and partly in the March quarters, retail loan disbursements have begun normalising from the end of the fiscal, according to the management.
In any case, HDFC delivered a steady set of numbers during the March quarter, with 13 per cent growth in core net interest income led by about 14 per cent growth in total loans (net of loans sold to HDFC Bank).
Loan growthHDFC’s healthy loan growth was led by higher growth in its non-retail segment.
This segment, which had been impacted by the overall slowdown in the market, has seen growth pick up in recent quarters. In the second half of the 2017 fiscal in particular, the growth was led by lease rental discounting — a loan against rental receipts from lease contracts with corporate tenants. Overall, growth in non-retail loans stood at 17 per cent year-on-year in the December and March quarters, up from 13 per cent in the September quarter.
In the retail loan segment, growth slowed marginally, but remained healthy. After growing 17 per cent in the September quarter, retail loans (net of loans sold to HDFC Bank) grew 15 per cent in the December quarter and 14 per cent in the March quarter.
Dominant leadership position in the housing finance market has been a key reason for the company’s healthy growth in the last couple of years.
HDFC’s retail loan book has grown at a rate which is at least 5 per cent above the growth levels clocked by banks in this segment. The growth in its retail loans has mainly been driven by volumes. Currently, HDFC’s average loan size is about ₹25.6 lakh.
HDFC’s ability to diversify its source of funding and low delinquency also remain key positives for the company.
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