HDFC Q2 net up 10 per cent at Rs 1,266 crore; Keshub Mahindra resigns as vice chairman

Housing Development Finance Corp Ltd (HDFC), India's top mortgage lender, posted a 10 per cent rise in net profit for the July-September quarter, and is betting on increased demand in smaller cities to boost growth in a slowing economy.

HDFC said it was on track to meet its lending growth target of 18 to 20 per cent this fiscal year ending on March 31 despite rising inflation and high interest rates in Asia's third-largest economy, which is growing at its slowest pace in a decade.

"Our lending is more to middle-income people, more in the outskirts of big cities, or in tier 2 and tier 3 cities where the growth is still reasonably good," HDFC chief executive Keki Mistry told Reuters on Monday.

India's growing middle-class population has been driving demand for homes, while luxury homes have been slow to take off.

In the first half of 2013, more than 65,000 housing units were launched for sale in the major cities, mainly in the secondary and peripheral markets and in the mid-income segment, compared with 48,000 units a year ago, a report by international property consultant CBRE showed.

Standalone net profit at HDFC for the fiscal second quarter was at Rs 1,266 crore compared with Rs 1,151 crore a year ago, falling short of market estimates of Rs 1,296 crore according to Thomson Reuters.

Total income rose 13 per cent to Rs 5,860 crore, as its loan book grew 19 per cent to Rs 1.85 lakh crore. HDFC's net interest margins, a measure of profitability, narrowed 0.10 per cent to 4.1 per cent over the same period.

HDFC vice chairman Keshub Mahindra and independent director Shirish B Patel have resigned with immediate effect, the mortgage lender noted. Both were directors of the company since its inception.

Shares in HDFC closed 0.2 per cent higher at Rs 821.15 on the BSE.

Copyright @ Thomson Reuters 2013