HDFC's third quarter earnings showed signs of green shoot as assets under management (AUM) growth was the best in 3 quarters, while net interest margins (NIMs) remained stable.

Sharing details of their third quarter performance, Keki Mistry, vice chairman and CEO, HDFC said, “Our individual loan approvals grew by 15 percent on a very large base and individual loan disbursements increased by 13 percent, so in line with what one would have expected.

With regards to AUM, he said growth in the individual loans was 16 percent and on a net basis, it was 14 percent. Non-performing loans (NPLs) were marginally up at 1.36 percent in December quarter compared to 1.33 percent in September, so it was a 3 basis points (bps) increase, he stated.

However, NIMs and spreads remained the same. "NIMs in Q2 were 3.3 percent and in Q3 as well stood at 3.3 percent. Spreads at the end of Q2 were 2.26 percent and at the end of Q3 were 2.27 percent,” said Mistry.

The only other significant feature of the loan was that the transition of Gruh into Bandhan happened during the course of this quarter because the National Company Law Tribunal (NCLT) approval happened now and therefore under the accounting rules, we had to mark-to-market (MTM) the Bandhan shares based on the share price, he said, adding that they cannot reflect it at cost price, the way we were reflecting the Gruh price. "So, there is a MTM gain that gets recognised over here but on that MTM gain, we have created the deferred tax liability - in future, if we have to sell it, we have to pay tax, there is a deferred tax liability that is being created,” he further stated.

Throwing further light on loan growth, he said, “Individual loans in the affordable housing segment continue to remain good. Our focus on affordable housing loans continues unabated. If you look at the breakdown of the lending we have done in this quarter, and the nine-month periods, it is almost the same."

"The loans given to customers, who are in the economically weaker section (EWS) or the lower income group (LIG) would constitute in number terms 36 percent, in value terms 18 percent. For that segment of the market, the demand is fairly strong and robust. The problem is in the high-end market. Demand for high value loans, higher ticket items is slowing down.”