‘Staying away from commercial realty estate helped’, says Deepak Parekh

Indicating stress in the commercial real estate sector, Deepak Parekh, chairman of mortgage lender HDFC, said the decision to stay away from such lending helped to maintain healthy asset quality.

“In the first half of the financial year [2018-19], we were often asked why we were not growing as aggressively as others in certain segments of the commercial real estate market. We held our ground by consciously staying away from funding what we perceived were riskier assets,” Mr. Parekh said in the annual report in his address to the shareholders.

“Unsurprisingly, in the second half of the year, we were asked what we did differently that enabled us to stay resilient and be the preferred choice in the flight to safety.

“Perhaps a combination of experience and adhering to our risk appetite held us in good stead,” he said.

Most housing finance companies are facing a crisis of confidence as banks have becometurned reluctant to lend to the sector which, in turn, increased their cost of borrowing and impacted business growth.

Preserving asset quality

Mr. Parekh said in the current environment, HDFC have had to work extremely hard to preserve asset quality.

HDFC had decided to curtail some of the non-individual loans in the previous financial year which resulted in lower growth of the overall loan book.

HDFC’s Non-performing loans of the individual portfolio stood at 0.7% while that of the non-individual portfolio stood at 2.34%.

“While our non-performing loans have been considerably lower than several others in the financial sector, we know we cannot rest on these laurels,” Mr. Parekh said.

He also admitted that there were ‘a few wrong calls and [we] underestimated certain risks.’

“In instances where we have had to write off loans, it has been done only after we had exhausted all possible options. Barring these few loans, our ethos of being conservative in our financial decisions has paid off,” he added.

Separately, the mortgage lender HDFC said it was planning to raise up to ₹45,000 crore by issuing bonds in various tranches on a private placement basis.

HDFC will take up the proposal for the approval of the shareholders at the annual general meeting to be held on August 2, it said in a filing to the exchanges.

This article is closed for comments.
Please Email the Editor

Printable version | Apr 14, 2021 2:16:47 PM |

Next Story