Mistry said the average tenure of HDFC's loans to housing projects was 5-5.5 years. So there was no need really for HDFC to raise 7 year money
HDFC is unlikely to face much competition from banks as far lending to affordable housing projects is concerned, says chief executive officer Keki Mistry. The RBI on Tuesday allowed banks to raise long term funds to lend to affordable housing and infrastructure projects, by issuing bonds with tenure of 7 years and beyond. Also, the funds raised through long term bonds would be exempt from cash reserve ratio (CRR) and statutory liquidity ratio (SLR) requirements. This would lower the cost of funds for both the banks as well as the borrowers.
In an interview to CNBC-TV18's Latha Venkatesh, Mistry said the average tenure of HDFC's loans to housing projects was 5-5.5 years. So there was no need really for HDFC to raise 7 year money. Also, HDFC could raise 7-year money at almost the same cost as any other public sector bank, since it enjoyed a triple-A rating, Mistry.
Also, HDFC's administrative expense at 30 basis points was much lower than 1.25-1.50 percent for banks. Also, banks would have to add provisioning costs to that.
"So for housing, I do not see serious competition from banks," Mistry said.
"But on the infra side, there could be competition, because infra rates are high," Mistry said.
"So for instance if a bank is lending at 13.5-14.0 percent for infra projects and its costs of funds come down, it can lower its rates," Mistry said.
HDFC stock price
On July 16, 2014, at 11:10 hrs Housing Development Finance Corporation was quoting at Rs 962.50, down Rs 14.9, or 1.52 percent. The 52-week high of the share was Rs 1045.20 and the 52-week low was Rs 632.20.
The company's trailing 12-month (TTM) EPS was at Rs 34.72 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 27.72. The latest book value of the company is Rs 178.41 per share. At current value, the price-to-book value of the company is 5.39.
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