HDB Financial sees bad loans double in a quarter

The second Covid wave exacerbated asset quality metrics at non-banking financial firms (NBFCs), with HDB Financial Services, NBFC ‘s arm HDFC Bank, reported a threefold increase in total bad debts in one year.

India’s Most Valuable Bank on Saturday said its non-bank lending institution posted a total non-performing asset ratio of 7.75% at the end of June 30, compared to 2. 86% in the same period last year. Bad loans have doubled in just one quarter, a sequential comparison of the numbers shows. The GNPA rate was at 3.89% as of March 31, 2021.

HDB Financial Services also saw net profit plummet by nearly 44% to 130.6 crore at the end of the June quarter from 232.7 at the same time a year ago.

The non-bank lender also posted net income of 1,655.8 crore ₹ compared with 1,609.7 crore for the quarter ended 30 June 2020.

“As HDB is catering to a segment of customers with one or two grooves underneath, the pandemic has had a huge impact on them purely due to supply-side constraints,” said Sashidhar. Jagdishan, MD, HDFC Bank. “Research done by our credit team shows that customer casualties are 4-5 times higher than what we normally see, which is extremely unfortunate. But this is a temporary phenomenon and it will recover when normalcy returns, our customers are not defaulters.”

Jagdishan also added that they do not want to monetize HDB Financial in the near future and will wait for the situation to evolve.

“We can try to discover the final price, but in the medium term we want to see how it recovers as it moves in a normal environment, at which point we will consider listing. prices on exchanges,” he said.

As of June 30, 2021, HDFC Bank holds 95.1% shares of HDB Financial Services. Non-bank lending institutions offer a wide range of loans and property finance products to individuals, emerging businesses and micro businesses.

Provisions and provisions for the quarter under review were ₹472.4 crore vs 453.5 crore for the quarter ended June 30, 2020.

Total outstanding loans increased slightly more than 1.5% in a year to ₹57,390 crore at the end of June quarter from ₹56,613 crore in the same period last year.

The liquidity coverage ratio was stable at 242%, much higher than regulation. Total capital adequacy ratio (CAR) is at 19.8% with CAR level I of 14.9%. As of June 30, 2021, HDB Financial has 1,321 branches across 957 cities and towns.

HDB Financial sees bad loans double in a quarter


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