Mortgage major HDFC today posted 33 per cent rise in third quarter profit at Rs 891 crore, boosted by higher retail sales and one-time income from sale of its investment in IL&FS.

Buoyed by the healthy numbers, the company said that it expects to close the fiscal with around 25 per cent spike in loan book.

The total income rose by 20.2 per cent to Rs. 3,321 crore in the period under review against Rs. 2,762.2 crore in the year-ago quarter.

Significantly, the company’s non-performing asset (NPA) levels came down to 0.85 per cent during the period under review from 0.94 per cent in the same period last fiscal.

HDFC also set aside an additional provision of Rs. 272 crore during October-December period to meet the recently introduced higher provisioning norms set by the home finance regulator National Housing Board (NHB) for dual rate home loans, company Vice-Chairman and Chief Executive Keki M. Mistry said.

NHB increased the provisioning coverage ratio of teaser loans to 2 per cent from 0.4 per cent.

HDFC earned a one-time income of Rs. 167.22 crore from the sale of its investment in IL&FS. In the reporting quarter, the lender had offloaded 2 per cent of its stake in educational arm of IL&FS.

In the same quarter last year, its other income, primarily from treasury operations stood at a lower Rs. 51.3 crore.

HDFC reported a 20.6 per cent increase in its loan book at Rs. 1,09,051 crore at the end of December compared to Rs. 90,110 crore in the same period last fiscal.

HDFC saw a massive 39 per cent jump in retail loan disbursals during the reporting quarter, and the overall loan book rose 27 per cent to Rs. 5,387 crore, Mr. Mistry said.

“We are hopeful of clocking 20-25 per cent rise in the loan book for the full fiscal. We are also hopeful of maintaining a good interest spread and margins in the next quarter,” Mr. Mistry said.

“Our interest spread stood at 2.15 per cent, while net interest margin (NIM) at 4.31 per cent,” he added.

Interest spread refers to the percentage difference between the interest rate charged on a bank loan and the lender’s cost of funds.

The net interest margin (NIM) is the difference between interest income generated by a bank and the interest it pays to its lenders. NIM indicates how successful the investment decisions are in comparison to the debt it raised.

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