Housing Development Finance Corporation (HDFC) on Monday reported a 16.40 per cent rise in standalone net profit for the quarter ended March 31, 2022. Net profit of the mortgage lender rose to Rs 3,700.32 crore against Rs 3,179.83 crore a year ago.

Analysts were expecting HDFC — which has announced its merger with HDFC Bank — to report a net profit of around Rs 3,400 crore.

Net interest income (NII) — or interest earned minus interest paid — during the quarter rose 14 per cent to Rs 4,601 crore compared with Rs 4,027 crore a year ago. Individual disbursements were at its highest in March.

Keki Mistry, vice-chairman and chief executive officer of HDFC, said the merger would reduce the cost of funds for the mortgage business. It will also enhance the group’s market share in housing by leveraging the distribution network of HDFC Bank.

Individual approvals grew 38 per cent in the last fiscal and disbursements, 37 per cent compared with the previous year. The demand for home loans and pipeline of loan applications continues to remain strong, HDFC said.

The growth in home loans has been seen in both the affordable housing segment and in high-end properties.

The average size of individual loans stood at Rs 33 lakh in the last fiscal against Rs 29.5 lakh in the previous fiscal. The loan size was Rs 34.7 lakh in January-March of 2022.

The board on Monday recommended a dividend of Rs 30 per share against Rs 23 per share in the previous year.

Merger impact

Mistry said the merger would add Rs 62,000 crore to the market cap of the combined entity. HDFC’s shareholding in HDFC Bank will be cancelled after the effective date of the merger.

“This will open up a potential leg-room of over 10 per cent of further holding for FPIs in HDFC Bank. The cancellation will also be EPS accretive for the combined entity,’’ Mistry said.

For the quarter ended March 31, 2022, the public holding in HDFC was 100 per cent of which the FPI holding stood at 69.19 per cent, down from 72.14 per cent in the third quarter of the fiscal.

Shareholders of HDFC will receive 42 shares of HDFC Bank for 25 shares held by them. Going by the swap ratio, analysts estimate the FPI holding in the merged entity will be around 65 per cent. The limit of foreign holding in a private sector bank is 74 per cent of its paid-up capital.