Housing Development Finance : Intimation to SE - Earnings call transcript- 07.02.2022

"HDFC Limited Q3FY22 Earnings Conference Call"

February 2, 2022

REPRESENTED BY: MR. KEKI MISTRY - VICE CHAIRMAN & CHIEF EXECUTIVE OFFICER

MS. RENU SUD KARNAD - MANAGING DIRECTOR MR. V. S. RANGAN - EXECUTIVE DIRECTOR MR. CONRAD D'SOUZA - MEMBER OF EXECUTIVE

MANAGEMENT & CHIEF INVESTOR RELATIONS OFFICER MS. ANJALEE TARAPORE - GENERAL MANAGER

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	HDFC Limited
	February 2, 2022
Moderator:	Ladies and gentlemen good afternoon and welcome to HDFC Limited's Q3FY22 Earnings
	Conference Call.
	As a reminder, all participant lines will be in the listen-only mode and there will be an
	opportunity for you to ask questions after the presentation concludes. Should you need assistance
	during the conference call, please signal an operator by pressing '*' then '0' on your touchtone
	phone. Please note that this conference is being recorded.
	We have with us HDFC's Vice Chairman and CEO - Mr. Keki M. Mistry, Managing Director -
	Ms. Renu Sud Karnad, Executive Director - Mr. V. S Rangan, Member of Executive
	Management & Chief Investor Relations Officer - Mr. Conrad D'Souza and General Manager -
	Ms. Anjalee Tarapore.
	I would now like to turn the conference over to Mr. Keki M. Mistry. Thank you and over to you.
Keki M. Mistry:	Good Afternoon Everyone.
	At the outset, I would like to welcome all of you to HDFC's earnings call for the third quarter
	of the current financial year.
	The Board of Directors at its meeting held earlier today approved the financial results for the
	nine months ended December 31, 2021 which were subjected to a limited review.
	Over the next few minutes I will give you a summary of the key highlights of the performance
	for the nine months and the quarter ended December 31, 2021.
	As I had mentioned in the last earnings call, business during the first quarter was partially
	disrupted as a result of the second wave. We however saw a sharp recovery in the second
	quarter. This momentum has continued through the third quarter.
	The third wave in January 2022 has seen a rise in infections but with lesser severity. We have
	had partial disruption at some locations but we do not expect a material impact on business.
	The following were the main highlights of the third quarter -
	RBI has continued to ensure that there is adequate liquidity in the system and we generally had
	stable interest rates during the quarter. In January 2022 we have seen a slight uptick in rates.
	We have increased deposit rates as well as rates on our non-individual loan products.
	The inflation trajectory is within the RBI's comfort zone.
	RBI has on November 12, 2021 issued guidelines on harmonising NPAs across the financial
	system. Accordingly, NPAs for the quarter have been computed in accordance with the circular.
	Liquidity Coverage Ratio (LCR) became applicable from the quarter ended December 31, 2021.
	This has resulted in higher levels of liquidity carried during the quarter.
	Let me start by quickly summarising the progress of our business through the quarter.
	Our individual loans approvals for the nine months ended December 31, 2021, were higher by
	45 percent compared to the corresponding period in the previous year.

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HDFC Limited

February 2, 2022

During the nine months ended December 31, 2021, individual loan disbursements grew by 48 percent over the corresponding period in the previous year.

It is important to note that in the 3rd quarter of the previous year we had the reduction in stamp duties in Maharashtra.

Despite this, individual loan disbursements in the 3rd quarter were 15 percent higher compared to the corresponding period in the previous year and were sequentially 5 percent higher than during the second quarter. Similarly, individual loan approvals were 20 percent higher than in the corresponding quarter of the previous year.

The month of December 2021 saw the second highest monthly individual disbursements ever.

Growth in home loans was seen in both, the affordable housing segment as well as high income groups.

89 percent of new loan applications were received through the digital channels.

Approvals and Disbursements continue to be strong in January. As at January 31, 2022 approvals and disbursements have crossed the FY21 full year numbers and are both at 105 percent of the FY21 full year levels

Retail loan applications inflow in January 2021 has continued to be strong

During the third quarter, we sold individual loans aggregating to Rs 7,468 crores.

The total loans sold during the nine months ended December 31, 2021 amounted to Rs 20,089 crores.

These loans were all assigned to HDFC Bank pursuant to the mortgage sharing agreement with the Bank.

Individual loans sold in the preceding 12 months amounted to Rs 27,591 crores as compared to Rs 16,956 crores in the previous year.

Individual loan growth on an AUM basis was 16 percent. If the loans amounting to Rs 27,591 crores had not been sold during the preceding 12 months, then the growth in the individual loan book would have been 24 percent.

Our individual loan book increased to Rs 4,08,356 crores - a growth of 16 percent over the previous year. In addition to this, the loans securitised by the Corporation and outstanding as on December 31, 2021 amounted to Rs 79,748 crores. HDFC continues to service these loans. Individual loans outstanding on an AUM basis amounted to Rs 4,88,104 crores.

With regard to the non-individual portfolio, we have seen a pick up in the lease rental discounting book since June 2021.

LRDs are disbursed against ready projects with tenants in place and hence the turnaround between approval and disbursement is relatively short.

Disbursement for Construction Finance is based on progress of construction and accordingly has a longer lead time between approval and full disbursement of the facility.

We presently have a good pipeline in construction finance loans as well as in the lease rental discounting segment and as I had mentioned in the last quarter, we expect to see a positive growth in non-individual loans for the full year.

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HDFC Limited

February 2, 2022

As at December 31, 2021 our non-individual loan book amounted to Rs 1,30,638 crores.

The overall loan book is now Rs 5,38,994 crores.

The total Assets Under Management (AUM) as at December 31, 2021 amounted to Rs 6,18,917 crores as compared to Rs 5,52,167 crores in the previous year - a growth of 12 percent.

Prepayments on retail loans for the current year, on an annualised basis, amounted to 10 percent of the opening loan book.

The average size of individual loans for the period ended December 31, 2021 stood at Rs 32.3 lacs as compared to Rs 28.5 lacs in the previous year.

For the third quarter the average size of individual loans amounted to

Rs 33.0 lacs.

The contribution from the Higher Income Group - defined as customers with an annual family income of Rs 18 lacs or more - has increased during the first nine months to 44 percent from 40 percent during FY21.

Our thrust on affordable housing loans continued.

During the nine months ended December 31, 2021, 30 percent of home loans approved in terms of number of customers and 13 percent in value terms were to customers from the Economically Weaker Section (EWS) or the Low Income Groups (LIG).

The average home loan to customers in the EWS segment amounted to Rs 11.1 lacs and to customers in the LIG segment amounted to Rs 19.5 lacs.

If we break up the loan book outstanding on December 31, 2021 on an AUM basis into different categories then individual loans constituted 79 percent of the total loan book, as compared to 76 percent in the previous year.

Construction finance constitutes 9 percent, of the total loan book, Lease rental discounting loans constitute 7 percent of the total loan book while corporate loans constitute 5 percent.

If you were to look at the incremental loan book growth and split that growth between individuals and non-individuals, then for the quarter ended December 31, 2021, the ratio of growth in individual loans vs non-individual growth is 94:6.

For the 9 months ended December 31, 2021 the ratio of incremental growth in the loan book is 95:5.

98 percent of the loans were sourced through distribution channels - however this is largely through HDFC Sales a 100 percent subsidiary of HDFC and HDFC Bank.

HDFC Sales accounted for 52 percent of the loans sourced while HDFC Bank accounted for 28 percent. Third Party DSAs accounted for 18 percent.

Thus 82 percent of HDFC's individual business was sourced directly or through our associates.

The Emergency Credit Line Guarantee Scheme (ECLGS) was extended to mitigate the economic distress caused by the second wave of the pandemic.

Under ECLGS 1, 2 and 3, the Corporation has approved an aggregate amount of Rs 2,215 crores of which 74 percent i.e Rs 1,643 crores has been disbursed by December 2021. Amounts disbursed under this facility are guaranteed by the Government.

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