HDFC is Indian’s largest housing finance company, and is expected to present 18% year-on-year growth in Q3 of the Fiscal year (October-December, FY13) net profit valued at Rs 1,132 crore. Its cumulative loan book is expected to expand within the range of 20-20% y-o-y, as per the average estimates calculated by around 14 brokerages. For the many senior banking analysts out there, HDFC will not show up any kind of positive or negative stupendous results that would otherwise bring the changes in market sentiments.


HDFC has got huge network and as the result, it is quite expected that the home loan growth is likely to witness the increase. But, the other side of coin is that HDFC is also likely to experience stiff market competition from the SBI, who also happens to have good network pan India. SBI is also competing in the home loan market. It is very significant to understand how HDFC will thwart the market competition and prevent any impact on the interest spread. The interest spread which is the change in the loan yields and the cost of borrowings is likely to come at 2.25%, not undergoing any phenomenal change since the Q3- July-September. In the wake of the Q3 end calculations, HDFC’s outstanding loans (after deductions of loans sold or securitized) were valued approximately Rs 1.55 lakh crore, maximizing to 22% y-o-y. It is significant to pint that HDFC home loans constitute only 2/3rd of the loans, whereas the remaining amount is siphoned from the loans given to builders.

At present, SBI has the cheapest home loan rate in the market, valued at 10% for loans maximizing to Rs 30 lakh. However, in case of HDFC, home loan rate is settled at 10.25% for 30 lakh.

HDFC will increase majority of funds (54% of the total borrowings) using the bond and debentures, although there is perpetual fall in the coupon rates over 10-year standard government bond yield.