 "HDFC Q1 net profit up 15%; Deepak Parekh says merger with HDFC Bank only at right time")
India’s largest Mortgage lender, Housing Development and Finance Corporation (HDFC) on Monday reported a higher-than-expected net profit of for the April-June quarter on standalone basis.
The company’s net profit stood at Rs 1,345 crore, up 14.6 percent on year but down 22 percent on quarter. A CNBC-TV18 poll had estimated the net profit at Rs 1,332 crore.
The lender’s income from operations stood at Rs 6447 crore, up 16 percent on year but down 2.6 percent sequentially.Total expenses during the quarter stood at Rs 4,537 crore, up5.6 percent on quarter and 14.7 percent on year.
The gross non-performing loans of the lender stood at 0.70% as at June 30, 2014 compared with 0.77% in the corresponding quarter last year, showing an improvement in the asset-quality.
The loan book of the bank, as at end June, stood at Rs2.03 lakh crore as against Rs1.76 lakh crore in the year ago period.Reacting to the robust numbers shares of HDFC were up 3.15 percent at Rs 1012 on the BSE.
No merger talks for now
Meanwhile, HDFC Bank, in a conference call, said there are no discussions at present on the merger of itself with HDFC.
“Clearly one of the major factors (with regard to the merger of HDFC with HDFC Bank) has been reserve requirement on HDFC’s liabilities,” said deputy managing director Paresh Sukthankar.
“Whether the RBI circular gives relief, whether it is on an ongoing basis, whether assets can be funded through bonds. We have not even tried to work this out,” said Sukthankar.
Times of India quotesHDFC chairman Deepak Parekh as saying “Both boards have not considered a merger with HDFC Bank but, at the appropriate time if it is necessary and beneficial to both entities, we may look into it.”
Rumors of merger between the two entities revived last week after the Reserve Bank of India allowed banks to float long-term bonds to raise funds for infrastructure lending and exempted such bonds from mandatory reserve requirements.
One of the major hurdles, cited by HDFC and HDFC Bank officials in the past, for the merger of the two entities was the huge reserve burden in the form of cash reserve ratio and statutory liquidity ratio, that would fall upon the assets on HDFC’s books, in the event of a merger.