HDFC Bank Becomes India's Biggest Lending Company in a $40 billion Deal

Mumbai: On Thursday Housing Development Finance Corp, India’s biggest mortgage lender, reported a 17.8% ascent in second-quarter profit, boosted by strong demand for home loans.

Benefit rose to 44.54 billion Indian rupees ($537.2 million) in the three months ended Sept. 30, from 37.81 billion rupees a year sooner, HDFC said in a trade filing. Analysts were expecting on average a profit of 41.55 billion rupees, as indicated by Refinitiv IBES data.

Interest in housing has remained strong despite a slew of interest rate hikes aimed at containing surging inflation, albeit increased funding costs are probably to compress net interest margins at moneylenders. “The demand for home loans continues to remain strong. Growth in home loans was seen in both mid-income segment as well as high-end properties,” HDFC said in a statement. HDFC’s interest income rose 24% to 131.43 billion rupees in the quarter.

For the first half of the year, individual payments grew by 36%. However, the net interest margin fell to 3.4% in the first six months, from 3.6% last year. HDFC is set to converge with India’s biggest private lender HDFC Bank to make a lending behemoth with a consolidated balance sheet of $237 billion.

HDFC Bank is purchasing its largest shareholder in a $40 billion deal, the country’s biggest ever, creating a monetary services titan to better tap rising interest for credit. HDFC Bank’s deal with lodging finance firm HDFC Ltd, which claims around 21% of the lender, will build on its 68 million customers and expand its home loan portfolio significantly while also opening up the scope for larger loans.

It will likewise help HDFC Bank shrink the gap with a state-run lender and bigger rival State Bank of India (SBI.NS) while boosting competition in the home loan space as people step up buys with pandemic woes receding. The deal will be useful for both companies but particularly HDFC Ltd, said Asutosh Mishra, the research analyst at Ashika Stock Broking.

By Archana

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