By Sachin Murdeshwar

Mumbai: DHFL, one of India’s leading housing finance company, today announced its Q3 results for the third quarter ended December 31, 2018. The company registered a net profit growth of 7.4% to ₹1,187.4 crore for the nine months ended December 31, 2018. Assets Under Management (AUM) grew by 25% year-on-year, reaching ₹ 1,26,725 crore from ₹ 1,01,351 crore as on December 31, 2018.

 

Commenting on the company’s financial performance in the Quarter, Mr. Kapil Wadhawan, Chairman and Managing Director, DHFL said, “DHFL’s heritage, robust business fundamentals and a legacy of goodwill continue to be our guiding force towards our vision of enabling home ownership dreams. Our cumulative efforts over the last few years, have enabled DHFL to maintain strong positions on credit quality, high ratings and a healthy asset-liability balance. We have also successfully implemented securitization of our portfolio that reflects the strength and depth of our asset quality. While the financial services sector is gaining back momentum, over the past few months DHFL has been agile and promptly responded taking immediate steps towards mitigating market concerns that have been witnessed by the industry as a whole. We are optimistic of future progress, as we continue to drive several growth-oriented initiatives aimed at widening financial inclusion across the country.”

Performance Details for the nine months ended December 31, 2018 as compared to the corresponding Nine months of the previous year:

• Net profit increased by 7.4% to ₹ 1,187.4 crore for the nine months ended December 31, 2018 as against ₹ 1,105.6 crore in the corresponding nine months of the previous year
• Profit before tax rose by 14.9% to ₹ 1,742.6 crore for the nine months ended December 31, 2018 as against ₹ 1,516.9 crore in the corresponding nine months of the previous year
• Loan book outstanding grew by 15.2% to ₹ 96,839 crore during the nine months ended December 31, 2018 as against ₹ 84,028 crore in the corresponding nine months of the previous year
• Loan disbursements were ₹ 27,962 crore for the nine months ended December 31, 2018
• Total Income was up by 23.8% to ₹ 9,935.8 crore during the nine months ended December 31, 2018 as against ₹ 8,028.6 crore in the corresponding nine months of the previous year
• Gross NPA stood at 1.12%
• Net Interest Margin stood at 3.40%

Performance Details for the quarter ended December 31, 2018 as compared to the corresponding quarter of the previous year:

• Net profit at ₹ 313.6 crore for the quarter ended December 31, 2018 as against ₹ 495.4 crore in the corresponding quarter of the previous year
• Profit before tax at ₹ 471.5 crore for the quarter ended December 31, 2018 as against ₹ 677.2  crore in the corresponding quarter of the previous year
• Loan book outstanding grew by 15.2% to ₹ 96,839 crore during the quarter ended December 31, 2018 as against ₹ 84,028  crore in the corresponding quarter of the previous year
• Loan disbursements reported at ₹ 510 crore for the quarter ended December 31, 2018,
• Total Income rose by 12.4% to ₹ 3,255.9 crore during the quarter ended December 31, 2018 as against ₹ 2,896.6  crore in the corresponding quarter of the previous year
• Gross NPA stood at 1.12%
• Net Interest Margin stood at 2.91%

Note – Current Quarter results are based on Ind AS, so comparative figures of previous corresponding quarter have been restated as per Ind AS.

Strategic Measures for Strengthening Fundamentals

Based on the current environment we planned to take certain steps to strengthen the fundamentals of DHFL. We presented the proposed strategic measures to our Rating Agencies, Investors and Lenders for a time bound action both short term – by March 2019 and medium term over next 18 to 24 months. We are pleased to state that we are well on course to meet them, as follows:

1. We discharged liabilities of close to Rs. 18,000 crs since 21st Sep 2018 including repayment of commercial papers amounting to Rs. 9,965 crs till Dec end. With this, CP outstanding has reached a level of just 1% of our borrowings and we have a stronger ALM going forward. We are well on our way to ensure liability coverage for the next 12 months.
2. Portfolio acceptability of granular loan book across banks from public and private sector reaffirms the portfolio quality and diversity of DHFL loan book. Generating liquidity of nearly Rs12,000 crs from an alternate source highlights the company’s ability to access diverse sources of funds.
3. We took steps to down sell developer loan portfolio and bring them to a level of Rs.10,000 crs by March 2019, reducing the builder book by about 50% from the level existing at that point in time. We have generated significant interest in our builder book and have successfully concluded sale of few major builder loans aggregating to close to 10% of this book so far, including a major transaction concluded today for a sum of Rs. 1,375 crs, details of which will be announced in a separate press release. Buyer being a leading FII in acquiring the project, speaks of the high quality of the builder loan book and has opened up dialogue with others to follow.
4. We have also initiated steps to sell non-core assets, which will be value accretive to DHFL. The sale of non-core assets are in the advanced stages and we expect to close a major one by 30th Jan 2019. Our overall commitment is to bring in capital to the tune of Rs. 2,000 crs by March 2019. Our leverage will come down from 9.27 to 7.5 times by this process.
5. Our liquidity projection till March 2019 and over the next 12 months, has been built on the strength of rebalancing the portfolio, effective leveraging of securitization capability as well as generating renewed trust in originating retail home loans in a calibrated manner. This will ensure that we maintain cash and investments in excess of 9% of our total borrowings which, over the next twelve months will be retained at a level close to 10%.

We expect these measures to enable DHFL to maintain its leadership position in the home loan market and forge ahead. DHFL will remain focused in the affordable housing sector, with majority of its home loan portfolio catering to the Lower and Middle Income (LMI) segment. 80% of DHFL’s home loan disbursements are in the affordable housing category with majority being first time home buyers availing housing finance to fulfill their homeownership dream. DHFL’s average loan ticket size at the portfolio level stands at INR 17 lakhs. DHFL’s robust performance continues to be driven by it’s strong focus on the LMI segment in Tier 2 and 3 markets. The company offers a range of home loan products including home loan, home extension loan, home improvement loan, plot loans, mortgage loan, project loan, SME Loan and non-residential property loan to all customer segments across India, retaining its concerted focus on the low and middle income segment

DHFL holds a leadership position in the affordable housing sector with majority of its home loan portfolio catering to the Lower and Middle Income (LMI) segment. 80% of DHFL’s home loan disbursements are in the affordable housing category with majority being first time home buyers availing housing finance to fulfill their homeownership dream. DHFL’s average loan ticket size at the portfolio level stands at INR 17 lakhs. DHFL’s robust performance continues to be driven by it’s strong focus on the LMI segment in Tier 2 and 3 markets. The company offers a range of home loan products including home loan, home extension loan, home improvement loan, plot loans, mortgage loan, project loan, SME Loan and non-residential property loan to all customer segments across India, retaining its concerted focus on the low and middle income segment.