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UPDATE 1-India HDFC's Q4 net up 40 pct, confident of growth

Wed Apr 30, 2008 5:17pm IST
 
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MUMBAI, April 30 (Reuters) - India's top mortgage lender, Housing Development Finance Corp (HDFC.BO: Quote, Profile, Research), on Wednesday reported a 40 percent rise in March quarter net profit on robust loan growth and a one-time gain from selling stake in a unit.

HDFC, which is 11.75 percent owned by Citigroup (C.N: Quote, Profile, Research), expected to maintain loan growth at around 25 percent despite high interest rates and slowing demand for property, vice chairman Keki Mistry said.

"We are not seeing any softening in home loan demand," he told CNBC TV18. "The penetration of mortgage is extremely low and therefore we are fairly confident of sustaining the growth."

Interest rates are at their highest since late 2002, which has hurt demand for loans. As well, the central bank has been raising banks' reserve requirements since December 2006, with the most recent rise announced on Tuesday, squeezing funds available for lending.

"HDFC never goes overboard. It maintains a steady growth pace. It generally keeps off the speculative buyers. I see them sustaining the growth." said Abhijit Majumder, banking analyst at Prabhudas Lilladher.

HDFC said its net profit in the March quarter rose to 7.68 billion rupees from 5.50 billion rupees, helped by a 2.02 billion rupees profit on sale of a 26 percent stake in its general insurance unit to Germany's Ergo International (ERGG.DE: Quote, Profile, Research)

In the year to March, it also sold stake in its life insurance unit and its entire holding in a back office firm, booking a profit of 6.36 billion rupees on the three deals, it said.

Profits on sale of investments fell to 25.4 million rupees in the quarter from 1.12 billion rupees a year ago, although analysts noted the funds from the stake sales meant there was no pressure on HDFC to sell off other investments.

HDFC shares fell 2.7 percent to 2,804.80 in a Mumbai market that fell 0.5 percent. HDFC shares fell 17 percent in the March quarter, less than a 23 percent fall in the main index. (Reporting by Narayanan Somasundaram)

 
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