HDFC Q1 net rises 5%, limited by rising benchmark rates

NII grows 8%, would have been higher but for ‘transmission lag’, says Mistry

Mortgage major HDFC on Friday reported a 4.95% growth in consolidated June quarter net profit at ₹5,574 crore, limited by the impact of the interest rate hikes on its core income.

On a standalone basis, the largest pure-play mortgage lender in the country reported a 22% increase in net profit to ₹3,669 crore for the quarter, which was a shade below the street estimates of growth in the high-20s.

Total income on standalone basis rose to ₹13,248.73 crore from ₹11,663.14 crore a year earlier.

Core net interest income (NII) rose 8% to ₹4,447 crore, which was one of the major reasons for the lower profit growth.

The company's vice-chairman and chief executive Keki Mistry explained that loan demand had been robust with the overall assets growing by 16%, but that the NII was impacted by rate increases which take time to be passed on to borrowers.

If not for this "transmission lag", the NII would have been 16% higher, Mr. Mistry said, adding that it expected NII growth to accelerate from here and normalise during the course of the fiscal year.

There was a narrowing in the net interest margin to 3.4%, and Mr. Mistry said the elevated levels of the year-earlier period were not sustainable.