Housing Development Finance

Corporation Limited

March 2015

HDFC Snapshot

WHO WE ARE
Incorporated in 1977 as the first specialised mortgage
company in India
Now a Financial Conglomerate with interests beyond
mortgages:
HDFC

21.7%
HDFC Bank

70.7%
HDFC
Standard Life
Insurance

59.8%
HDFC Asset
Management

73.6%
HDFC ERGO
General
Insurance

58.6%
GRUH
Finance

100%
HDFC
Property
Ventures

80.5%
HDFC
Venture
Capital

89.5%^
Credila
Financial
Services

80% shares held by Foreign Investors

^ On a fully diluted basis

HDFC Snapshot

BUSINESS SUMMARY

Loans Outstanding (Gross loans)

(March 31, 2015)

: Rs. 2,533.33 bn
: US$ 40.34 bn

Individual Loans Originated CAGR (5 years)

: 21%

Cumulative Housing Units Financed

: 5 million

Total loan write offs since inception

(of cumulative disbursements)

: Under 4 basis points

Cost to Income Ratio (FY 2015)

: 7.6%

Unrealised gains on listed investments1

(March 31, 2015)
Profit After Tax CAGR (5 years)2
(FY 2015)

: Rs. 551.85 bn
: US$ 8.78 bn
: Standalone - 18%
Consolidated - 23%

1. Unrealised gains on unlisted investments not included in the aforesaid.

2. PAT for FY 2015 is excluding the impact of Deferred Tax Liability (DTL) on Special Reserve.

HDFC Snapshot

DISTRIBUTION
No. of Outlets

Denotes cities with 4 or more offices

Denotes cities with 3 Offices
Offices

2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

173
203
219
234
250
267
278
289
311
331
354
378

Outreach programmes to several locations

Deposit & loan products offered to individuals in over 2,400 locations
Inclusive 103 outlets of HDFCs wholly owned distribution company
6

MORTGAGE MARKET IN INDIA

Mortgage Market in India

MARKET SCENARIO
High demand growth driven by:
Improved Affordability
Rising disposable income
Tax incentives (interest and principal repayments deductible)
Affordable interest rates
Increasing Urbanisation
Currently only 31% of Indian population is urban
Favorable Demographics
60% of Indias population is below 30 years of age
Rapid rise in new households
The urban housing shortage is estimated at 18.78 million units (Source:
Ministry of Housing & Urban Poverty Alleviation)
8

Mortgage Market in India

60

14.00

50

12.00
10.00

40

8.00
30
6.00

22.0

20

15.6

4.00

11.1

10

8.3 6.6

5.9

5.3

5.1

4.7 4.3

4.7 5.0

5.1

5.1 4.5

4.7 4.8 4.6 4.7 4.6 4.4

Annual Income (Rs. Lac)

Property Value (Rs. Lac) &

Affordability

IMPROVED AFFORDABILITY

2.00
0.00

Property Cost (Rs. Lac)

Affordability

Annual Income (Rs. Lac)

1 Lac = 1,00,000

Representation of property price estimates

Affordability equals property prices by annual income

9

Mortgage Market in India

TAX INCENTIVES HAVE LOWERED THE

EFFECTIVE RATES ON MORTGAGES
Loan amount (Rs)
Nominal Interest Rate(%)

FY 2016

FY 2002

FY 2000

2,000,000

2,000,000

2,000,000

9.85%

10.75%

13.25%

Max deduction for interest allowed

200,000

150,000

75,000

Deduction on principal

150,000

20,000

20,000

31.50%

34.50%

Tax rate (highest tax rate applicable)

34.61%
15

15

15

Total amount paid per year

347,000

269,028

307,620

Interest component

197,000

215,000

265,000

Principal repaid

150,000

54,028

42,620

Tax amount saved

120,097

53,550

32,775

76,903

161,450

232,225

Tenor (years)

Effective interest paid on home loan

Effective interest on home loan

3.8%

8.1%

11.6%

Note Union Budget 2014-15 had increased the tax exemption limits on the principal and interest
component of a housing loan by Rs. 50,000 each.

10

Mortgage Market in India

LOW PENETRATION IMPLIES ROOM FOR GROWTH

MORTGAGES AS A PERCENT OF NOMINAL GDP
120%
94%

100%
81%
80%
62%
56%

60%

45%
32%

40%
20%

18%

36%

45%

40%

20%

9%

0%

Source: European Mortgage Federation, HOFINET & HDFC estimates for India

11

OPERATIONAL & FINANCIAL

HIGHLIGHTS: MORTGAGES

12

Operational & Financial Highlights: Mortgages

HDFCs ASSETS
(As at March 31, 2015)
89%

Total Assets as at March 31, 2015

Rs. 2,539.52 billion (US$ 40.44 billion)
Total Assets as at March 31, 2014
Rs. 2,254.32 billion (US$ 35.90 billion)
Loans (including debentures & corporate deposits
for financing real estate projects) - 89%
Investments - 6%

5%
6%

Other Assets - 5%

Total assets have been computed as per Indian Accounting Standards and consequently not fair valued.
The unrealised gains on investments as at March 31, 2015 has not been considered in the aforesaid. The
unrealised gains only on listed investments as at March 31, 2015 stood at Rs. 551.85 billion.
US $ amounts are converted based on the exchange rate of US$ 1= Rs. 62.80

13

Operational & Financial Highlights: Mortgages

CORE BUSINESS LENDING

(As at March 31, 2015)
INDIVIDUAL LOANS
Home Loans
Fixed rate loans
Floating rate loans
Home Improvement
Loans
Home Extension Loans
Home Equity Loans
Short Term Bridging
Loan
Loans to NRIs

Individuals
71%

LOANS

Corporate 11%

Construction
Finance 12%
Rental
Discounting 6%

March 31, 2015

Rs. in billion

Gross Loans
Less: Loans securitised - on w hich
spread is earned over the life of the loan

2,533

Loans Outstanding

2,282

251
14

Operational & Financial Highlights: Mortgages

GROSS NON-PERFORMING LOANS & PROVISIONS FOR

CONTINGENCIES
1.20%

1.05%

Percentage

1.00%
0.80%

As at March 31, 2015

0.96%
0.70%

0.69%

0.89%
0.67%

NPLs (3 months):

(Rs. in bn)
15.42

Provisions for
Contingencies:
Of which
NPAs:
4.81
Other Provisioning: 15.53

0.60%
0.40%
0.20%
0.00%
FY13
GROSS NPLs

FY14

FY15

PROVISIONS FOR CONTINGENCIES

Regulatory
Provisioning:
Excess Provisioning
over Regulatory
Provisioning:

20.34

17.03

3.31

Non Performing Loans (NPLs) of individual loans stood at 0.51% of the individual portfolio and NPLs
of non-individual loans stood at 1.01% of the non-individual portfolio.
Total loan write-offs since inception is less than 4 basis points of cumulative disbursements.

19

Operational & Financial Highlights: Mortgages

STRENGTHS
Home Loan Strengths
Low average loan to value ratio and instalment to income ratios
Efficient recovery mechanisms
Steady level of prepayments
Quality underwriting with experience of over 38 years
Corporate Strengths
Strong brand customer base of 5 million
Stable and experienced management average tenor of senior
management in HDFC ~ 30 years
High service standards
Low cost income ratio: 7.6% (As at March 31, 2015)
25

Valuations and Shareholding

SHAREHOLDING PATTERN
80%
Foreign Shareholders - 80%

Individuals - 10%

Financial Institutions, Banks & Insurance

Companies - 6%
Mutual Funds - 2%

Companies - 2%

10%
2% 2% 6%
30