HDFC Ltd. Q4FY21 Conference Call Highlights | Yadnya Investment Academy

Q4FY21 Highlights:

• Stimulus announced by the central government and measures taken by the RBI in lowering down of REPO Rates helped in growing the business.
• Maharashtra branches accounted for 28% of the disbursements in Q3 & Q4 as compared to 26% in the previous year.
• The individual loan disbursements in the first two quarters of FY21 were 35% lesser than the previous year in the same tenure.
• Whereas in the last two quarters, i.e., Q3 & Q4, the business picked up the pace, and the individual loan disbursements grow by 42% compared to Q3 & Q4 of FY21.
• March 2021 witnessed the highest level of receipts, approvals, and disbursements. During Q4 FY21, individual loans saw a growth of 60% when compared to Q4 of FY20.
• CRISIL & ICRA for the 26th consecutive maintained a rating of F-AAA and N-AAA ratings respectively for the corporation deposits.
• HDFC has now had over 20.8 Lakh deposit accounts of over 6.9 Lakh depositors.
• The overall collection efficiency of the loans has improved nearing the pre-COVID levels.

• The collection efficiency of individual loans in March 2021 stands at 98% compared to 96.3% in September 2020.

Net Interest Income (NII) and Net Interest Margin (NIM):

• NII (without considering the sale of loans) for the year ended 31 March 2021 stood at Rs. 15,172 Cr. compared to Rs. 12,904 Cr. previous year (growth of 18%).
• NII for Q4 FY21 stood at Rs. 4,065 Cr. compared to Rs. 3,564 Cr. in the corresponding quarter of the previous year.
• Due to the pandemic situation, excess liquidity is maintained and invested in the overnight funds which earn ~2% lower return than the Cost of Funds.
• NIM for the year ended 31 March 2021 stood at 3.5% compared to 3.4% in the previous year. 
• The Capital Adequacy Ratio (CAR) stood at 22.2% of which Tier-1 Capital was 21.5% and Tier-2 Capital stood at 0.7% which is way above the regulatory requirement.

NPA situations & Provisions:

• As per regulatory norms, the Gross Non-Performing Loans stood at Rs. 9,759 Cr. (1.98% of the loan portfolio).
• Non-Performing individual loans stood at 0.99%, whereas, Non-Performing non-individual loans stood at 4.77%.
• As per regulatory norms, the provisions that are required to carry amounts to Rs. 5,491 Cr. as of 31 March 2021, against which the company, in reality, has made provisions of Rs. 13,025 Cr. which is 137% higher than the requirement.

• As of March 31, 2020, the COVID 19 provisioning stands at Rs. 844 Cr.

Home loan segment:

• Growth has been seen in housing loans in both affordable housing as well as middle & high-end properties.
• The individual personal home loans have gone up by 3% in Q4 FY21 as compared to the Q4 of FY20.

Structure of the Loan Book:

• The loan book has increased to Rs. 4,98,298 Cr. in March 2021 which is 11% higher than the previous year. 
• The reason for lower growth in the non-individual loans is the REITs market, the company received prepayments on lease rental discounting book amounting to Rs. 9,997 Cr. which accounts for 7% of the non-individual book.
• During the Q4 of FY21, the company sold loans aggregating t Rs. 7,503 Cr.
• For the complete year, the total loans sold accounts to Rs. 18,980 Cr.
• Prepayment of loans come down to 10.3% this year when compared to 10.9% in the previous year.
• The average size of the loans at the end of FY March 2021 amounts to Rs. 29.5 Lakhs compared to Rs. 27 Lakhs in FY 2020.
• During the year ended March 2021, 33% (according to number) and 16% (in terms of value) of the loans approved were to the economically weaker section and the lower-income group.
• Total loan book constituents: (According to AUM):

Individual Loan – 77% in FY21 as compared to 74% in FY20, Construction Finance – 10% in FY21. Lease Rental Discounting – 7% in FY21, and Corporate Loans – 6% in FY21.

• The incremental loan book growth for the Q4 of FY21 consists of 116% growth in individual loans and a decline in the non-individual loans of -16%.
• Total loans sourced from distribution channels was 98%, out of which HDFC Sales was 54%, HDFC Bank was 27% and Third-party sales was 17%.
• RBI promised a one-time restructuring of loans under the resolution of COVID 19 related stress, regarding these loans amounting to Rs. 4,479 Cr. (0.8% of AUM) are restructured.

Assets Under Management (AUM):

• The Assets Under Management (AUM) as of March 2021 amounts to Rs. 5,69,894 Cr. as compared to Rs. 5,16,733 Cr. in the previous year and posted a growth of 10% YoY.
• Individual loan growth on AUM basis stands at 12%.
• Rs44.79bn worth of accounts has been restructured. 27% of the restructured loans were from the individual segment and 73% from the non-individual segment. One large account constituted 58% of total restructured loans.

Borrowings:

• During the year the total borrowings have increased to Rs. 4,41,365 Cr.
• Term Loans including external commercial borrowings and Refinance from National Housing Bank (NHB) account for 24% of borrowings. Market borrowings accounted for 42% of the borrowings.
• Deposits were the major source of funding during the year. At the year ends stood at Rs. 1,50,131 Cr. showing a growth of 13% YoY basis.
• Deposits account for 80% of the incremental borrowing in the current year.
• In FY21, individual loan approvals grew 10% while applications grew 8%. Growth in home loans was witnessed in both affordable housing and high-end segments.
• Under ECLGS, Rs. 24.81bn was approved, and Rs. 9.36bn was disbursed.

FY22 Outlook:

• The sharp demand for housing loans will continue in the further financial year as well.
• The pandemic has affected all market participants but with the well-equipped digitalization and learnings of the past year, the company is very confident to face the coming year.

Miscellaneous:

• In August 2020, HDFC completed Qualified Institutional Placements of equity shares and raised Rs. 10,000 Cr.
• The profit booked for the year ended 31 March 2021 stood at Rs. 1,398 Cr. compared to Rs. 3,524 Cr. in the previous year March 2020.
• For the year ended 31 March 2021, the Cost to Income ratio stood at 7.7% compared to 9% the previous year.
• The distribution network of the company consists of 593 outlets which include 203 offices of HDFCs wholly-owned company HDFC Sales Pvt. Ltd.