HDFC Q3 Results Review - Another Good Quarter; Asset Quality, Coverage Improves Further: Yes Securities

Yes Securities Report

Housing Development Finance Corporation Ltd.’s Q3 FY23 performance was largely in-line with expectations with a mild miss on core pre-provision operating profit offset by lower credit cost.

Softer-than-expected core PPOP growth (3.8% QoQ/10.6% YoY) was caused by a deceleration in assets under management growth (1.6% QoQ/13% YoY) even as net interest margin/spread performance was slightly better (cumulative NIM improved).

On asset quality front, reduction in stage-II and stage-III continued and the coverage was enhanced again.

Annual growth in individual loans moderated to 17.6% YoY from 20% YoY as of the preceding quarter with the disbursements being 9-10% lower QoQ. Higher holidays impacted originations in October and November; however, December has witnessed a return to normal trajectory.

HDFC's management does not expect any durable impact on home loan demand/growth from recent rate hikes. Annualised pre-payment rate stayed put around 10%, in-line with historical trends.

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