HDB Financial Services Limited
Company Background:Incorporated in 2008, HDB FINANCIAL SERVICES (HDBFS) is a non-banking company (NBFC) providing loans, fee-based products, and BPO services.
The company offers wide range of loan (secured and unsecured products) to various segments namely consumer loans, enterprise loans and asset finance. HDBFS earns fee based income from selling insurance products, mutual funds, extended warranty and road side assistance. The company offers services for running collection call centers for HDFC bank and also back office operations and processing support to HDFC bank.
The company has 1,468 branches in 1,070 cities in India as of 31st March 2020. HDFC Bank is the promoter of the NBFC holding 95.30% shares of the company.
Financial Performance:The Company continued to grow cautiously and COVID 19 affected its operations. As a result, loan disbursements during the year were just 29,853 crore in FY20 as against the previous year of 31,654 crore. The Assets under Management (AUM) of HDBFS increased to Rs. 58,832.75 crore from 55,425.16 crore in FY19.
The profitability was hit due to increase in finance costs to disburse loans, increased staffing to support the growth and impairment of financial instruments as HDBFS moved from I-GAAP to Ind AS.
A Snapshot of the financial performance is given below: (Amounts in Rs. crores)
| Particulars | 2020 | 2019 | %chg |
| Revenue from operations | |||
| Interest income | 8,233.47 | 6,712.12 | 22.7% |
| Sale of services | 2,113.23 | 1,648.12 | 28.2% |
| Other financial charges | 409.77 | 364.57 | 12.4% |
| Total Revenue from operations | 10,756.47 | 8,724.81 | 23.3% |
| Expenses | |||
| Finance Costs | 4,081.42 | 3,333.33 | 22.4% |
| Impairment on financial instruments (Expected Credit Loss) | 1,441.57 | 636.94 | 126.3% |
| Employee Benefits Expenses | 3,195.57 | 2,551.74 | 25.2% |
| Depreciation, amortization and impairment | 109.66 | 61.92 | 77.1% |
| Others expenses | 463.77 | 416.82 | 11.3% |
| Total Expenses | 9,291.99 | 7,000.75 | 32.7% |
| Profit/(loss) before tax | 1,464.48 | 1,724.06 | -15.1% |
| Total Tax expense | 459.63 | 570.82 | |
| PAT | 1,004.85 | 1,153.24 | -12.9% |
| Diluted EPS | 12.77 | 14.69 | |
| Book Value per share | 101.8 | 91.36 | |
| NIM (Net interest Margin) | 7.20% | 6.20% | |
| GNPA | 3.83% | 1.82% | |
| NNPA | 3.09% | 1.23% | |
| ROE | 12.53% | 16.07% |
For detailed results on financial performance, please click here.
Future Outlook:
The Company remains well capitalized with a capital adequacy ratio of 19.36%. Given the most financial businesses will be hit by defaults arising out of loss or business and jobs, the near term future is bleak. However, from a longer term perspective, the NBFC continues to grow its portfolio of products and demand for financial products will remain a cornerstone for any economy which wants to develop. Thus, the long term growth prospects remain intact till they can manage to navigate the crises without much of burn.