What to expect from HDFC Q3 results

The country’s largest mortgage lender – HDFC will be reporting its December quarter results on Wednesday. Below are the five key things to watch out for in the results:

Loan growth – HDFC’s loan book is expected to grow by 15-16% this quarter. However, post sell downs, its loan growth is expected to be 12 -13%.

Non Individual loan growth – This includes loans given to developer, corporate, lease rental discounting. Although this is a subset of overall loan growth, this segment generates a higher yield and thereby driving the profitability. Given the slowdown in corporate credit, this segment is expected to grow at a slower rate than individual loans. At present, non-individual loans constitute 30% of the total assets.

Asset quality – The company’s asset quality is expected to remain healthy in the December quarter. Its gross non-performing loans are expected to remain under 0.8% of the total assets. In addition to this, due to company’s excess provisions made over the previous quarter, its net non-performing loans may continue to be nil this quarter.

Interest Spreads: Interest spread is the difference between average yield and cost of funding. For the December quarter, interest spreads may remain flat at 2.3%. As a result, its net Interest income may grow by a modest 11 % this quarter.

Profit on sale of investments is expected to be lower on y-o-y basis this quarter.