Mortgage lender Housing Development Finance Corporation (HDFC) reported a 27 per cent decline in pre-tax profit at Rs 2,692 crore in Q4FY20 compared to Rs 3,691 crore in the same period a year ago, due to higher provisioning for uncertainties arising out of the spread of covid-19. The lender’s net profit declined 22 per cent to Rs 2,233 crore in Q4FY20 compared to Rs 2,862 crore in Q4FY19.

It made provisions to the tune of Rs 1,274 crore in the quarter ending March FY20, up 220 per cent from Rs 398 crore in the same period last financial year because of Covid-19. Around 26 per cent of the lender’s loan book is under moratorium and in the individual loan segment, 21 per cent of the loans under management is under moratorium.

After adjusting for fair value adjustments, profit on sale of investment, dividend and provisioning, the adjusted profit before tax for the quarter ended March 31, 2020 is, Rs 3,535 crore compared to Rs 3,064 crore in the previous year, reflecting a growth of 15 per cent, the lender said.

It reported a 14 per cent growth in net interest income (NII) for the quarter ended March FY20 at Rs 3,564 crore compared to Rs 3,139 crore in Q4FY19. Including the fee income earned by the lender on securitised loans, NII stood at Rs 3,780 crore in Q4FY20, up 17 per cent from Rs 3,238 crore in Q4FY19. Net interest margin (NIM) of the lender stood at 3.4 per cent in Q4FY20 compared to 3.3 per cent in Q4FY19.

The non-performing assets (NPAs) of the lender rose to 1.99 per cent in the quarter ending March, 2020 compared to 1.18 per cent in Q4FY19. While individual loans segment saw ratio of bad loans risings 25 basis points to 0.95 per cent from 0.70 per cent, the non-individual segment a steep rise in bad loans ratio to 4.71 per cent from 2.34 per cent.

Keki Mistry, Vice Chairman & CEO HDFC said, they downgraded two non-individual loans despite them not being an NPA because they saw some stress in these loans. Had they not known shown these loans as NPAs, the NPA in non-individual segment would have been 3.7 per cent.

As far as individual loan segments is concerned, 97 per cent of the lenders customers use electronic modes of repayment for their instalments. However, in respect of 3 per cent of borrowers, where follow ups would have otherwise been done through personal visits, this was not possible owing to the national lockdown. Recovery efforts were hampered in the latter half of March 2020, which resulted in an increase in individual non-performing loans, HDFC said.

My sense is that when normalcy comes back into the system, the individual non-performing loan numbers will get back to the levels at which we were used to seeing them, Mistry added.

The total loan book of the lender grew 12 per cent to Rs 5.16 trillion while the individual loan book grew 21 per cent. The corporation's capital adequacy ratio stood at 17. 7 per cent, of which Tier I capital was 16.6 per cent.