DHFL Q2 net profit jumps 26%

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DHFL, one of India’s leading housing finance companies, today announced its results for the second quarter ended September 30, 2017. The company registered a net profit growth of 26.1% to Rs 293.3 crore for the quarter ended September 30, 2017.

DHFL

Performance Details for the quarter ended September 30, 2017 as compared to the corresponding quarter of the previous year:

Net profit increased by 26.1% to 293.3 crore for the quarter ended September 30, 2017 as against Rs 232.6 crore in the corresponding quarter of the previous year

Profit before tax rose by 23.2% to Rs434.1 crore for the quarter ended September 30, 2017 as against Rs 352.2 crore in the corresponding quarter of the previous year

Loan book outstanding grew 24.6% to Rs.81,390crore during the quarter ended September 30, 2017 as against Rs 75,223 crore in the corresponding quarter of the previous year

Loan disbursements and sanctions were Rs 9,950crore and Rs 14,201crore, respectively for the quarter ended September 30, 2017, showing an increase of 50.6% and 68.3% respectively, over the corresponding period of the previous year

Total Income was up by 21.0% to Rs. 2,614.2 crore during the quarter ended September 30, 2017 as against Rs 2,161.4crore in the corresponding quarter of the previous year

Gross NPA stood at 0.96% amounting to Rs 783.4 crore

Net Interest Margin stood at 3.05%

Kapil Wadhawan, Chairman and Managing Director, DHFL said, “DHFL has been reporting a steady growth in its AUM which reflects the success of its business strategies and the company is on course towards its growth targets for FY 18. On an overall basis, the affordable housing industry continues to be on a high growth trajectory supported by the several steps taken by the government to achieve its Housing for All objective by 2022. Over the last few months, DHFL has already undertaken several key growth-oriented initiatives to capitalize on industry opportunities and it continues to implement those efforts to fulfill its mission of enabling home ownership across India.” The quarter was also marked by the adoption of the new GST regime as India adopts a more efficient, transparent and a leaner taxation environment, which is expected to spur growth prospects of all key sectors of the economy.

Wadhawan added, “For DHFL the second quarter has been another period of commendable growth. The company remained focused on expanding its customer outreach strategies in Tier 2 /3 towns through the unique DHFL Griha Utsavin a first-time initiative which is well aligned to the Government’s vision of Housing For All by 2022. We also put in place measures to enhance internal efficiencies through the establishment of Central Processing Unit in Mumbai & Hyderabad. This will significantly expand the bandwidth of the sales team enabling them to concentrate on their sales activities, allowing a faster turnaround time, strengthening risk management and more importantly enable respective teams to focus on enhancing core competencies.With strong business fundamentals and core organizational growth drivers in place, DHFL is actively implementing its business growth strategies to bring positive transformational changes in the lives of its customers.”

Key highlights over the last 2 quarters:
DHFL Griha Utsav: A unique housing cum finance exhibition in tier 2 and 3 locations to provide the LMI segment, easy access to affordable finance and housing options. Successfully implemented over 15 Griha Utsav exhibitions this quarter, which saw overwhelming participation from local customers and several affordable housing developers. Also brings attractive offers including waivers on processing fees, spot sanctions on home loans and interest rate starting at 8.35%, while introducing the DHFL brand to LMI customers across India. This all-India scheme has established a great platform for home buyers to select from hundreds of properties being showcased at DHFL’s Griha Utsav exhibitions and aligned to the Prime Minister’s vision of enabling home ownership.

Strengthens senior leadership team:As DHFL progresses towards it’s a higher phase of growth we have taken other critical steps to ensure that over all organizational performance is well on course. DHFL has been steadily building its leadership team at strategic levels through several key talent acquisitions to ensure successful execution.

Technology-led investments:As an important step towards growth, we made significant investment in next -generation IT infrastructure to build a robust, scalable and flexible technology landscape. The digital and technology transformation program is to usher enhanced customer, partner & employee experience, reduced turnaround time, improved efficiency and higher productivity.

Aggressive marketing initiative to supplement customer reach-out through new TVC: Unveiled new campaign “AisaDesh Ho Mera” presented by the most favourite ShahRukh Khan. The campaign is based on the “Housing for All’ scheme and is unique as it urges customers to believe in their dreams of an India where owning a home can easily become a reality and “Saste, aasan home loans par sabkahaq ho”. The campaign reiterates that ‘aspirations of a beautiful, peaceful and prosperous India are great positive forces’ that will propel each of us towards greater progress. DHFL continues to play a dominant role in this transformation.

DHFL moves to new premises: DHFL Group braces itself for the next level of growth. To ensure that better synergies within all business verticals, DHFL has relocated to the dynamic new work environment of the DHFL House.DHFL House will support it’s staff with the best professional facilities to enhance efficiency, an environment that nurtures well-being, opening communication lines to drive agility, action, ownership and accountability. Aid team in bringing forth greater motivation to serve millions of diverse customers across all businesses.

Future of Housing Finance – Outlook
The Indian housing finance industry is growing rapidly. Mortgage lending is a strong driver of growth for both housing demand and construction of houses in the country, driven by urbanization especially in the affordable segment. Consequently, housing finance companies (HFCs) have witnessed an increase in total outstanding loans with a CAGR of 26% between financial year 2009-2010 and 2014-2015.

The resilience of the HFC segment can be pinned to strong asset quality, with gross non-performing assets as low as 0.8%. Over time, HFCs have gained a strong understanding of the focused segment, developed strong under writing skills and have been able to successfully leverage their commitment to the segment and hence deep understanding of customers. This is also supported by factors such as nature of the asset class, the customer profile (around 80% home loans are to salaried customer), practices like direct debit/ cheque being the primary mode of payment, and the fact that the average loan to value (LTV) is around 75%. This has enabled HFCs to maintain low credit costs and – coupled with low operating expenses – that has ensured profitability.

As urbanization in India gallops, home loan disbursements are expected to record a 5-year CAGR of 17-18% to reach Rs.9.0 trillion by 2020-21, driven by higher finance penetration, improving affordability, urbanization and demand for affordable housing.

With expanding urbanization, understanding the underpenetrated opportunity of Tier 2 & 3 towns as India’s new wave metros and mini-metros, have become critical for housing finance companies to devise their growth strategies in these hotspots that are clearly India’s new growth centers. The real estate markets in these new regions are maturing as consumers become aware of the benefits offered by the Government in affordable housing and move up the value chain from rentals to ownership.

The announcements made earlier by the Prime Minister under Pradhan MantriAwasYojna for Economically Weaker section (EWS) and Low Income Group (LIG) to boost mass housing in peripheral areas with attractive interest subventions have provided great impetus to the affordable housing industry, while also acknowledging the potential of the segment at the bottom of the pyramid, where growth and potential exists.