India’s largest mortgage lender HDFC misses Q3 profit view on higher funding costs

HOUSING Development Finance Corp (HDFC), India’s largest mortgage lender, reported a 13.2 per cent rise in third-quarter profit on Thursday (Feb 2), missing estimates, as higher funding costs took the shine off strong housing loan growth.

Housing demand has remained strong in India despite a flurry of interest rates hikes last year, as a burgeoning rising middle class buys real estate. Increased funding costs, however, have compressed net interest margins and net interest income.

Profit rose to 36.91 billion rupees (S$587.5 million) for the three months ended Dec 31, compared to 32.61 billion rupees a year earlier, the company said in an exchange filing.

Analysts, on average, had expected a profit of 37.81 billion rupees, according to Refinitiv IBES data.

Total expenses rose 37.3 per cent to 106.35 billion rupees, mainly driven by higher finance costs that surged 41 per cent.

HDFC, set to merge with India’s largest private lender HDFC Bank, said interest income climbed 30.8 per cent to 144.58 billion rupees, while net interest margin for nine-months ended Dec 31, stood at 3.5 per cent.

Shares of the lender were largely steady after the results, trading 2 per cent lower. REUTERS