HDFC's Keki Mistry expects the pace and magnitude of hikes in benchmark interest rates to ease though he expects increases to continue for now. "It’s a difficult situation for the RBI to handle. My sense is that the Fed (US Federal Reserve) may continue to rate hikes for some time," Mistry, Vice Chairman and CEO of mortgage lending giant HDFC, told CNBC-TV18.
"However, I do believe, and this is after talking to a number of investors, that there is a possibility that somewhere in the second half of the next year, the US could actually lead you in to a situation where the Fed may actually look to reduce rates and not increase any further," he said.
Remarks from the industry veteran come at a time when central banks are rapidly and aggressively raising key interest rates — as a tool to tighten the supply of money — to tackle red-hot inflation but without hurting the pace of growth. Nervousness around steep hikes in rates has keep investors around the globe on the back foot for weeks and counting.
Last week, the RBI raised the repo rate — the key rate at which it lends money to commercial banks — by 50 basis point to 5.9 percent, taking its upwards revision to 190 basis points in the COVID-era benchmark rate in four instalments since May.
RBI Governor Shaktikanta Das warned of more hikes in going forward, as the central bank's rate-deciding panel lowered its GDP growth forecast to seven percent from 7.2 percent.
In a separate development, HDFC said in a quarterly business updated that it saw a 28.2 percent increase in the loans assigned to Rs 9,145 crore in the July-September period compared with the corresponding period a year ago.
HDFC's dividend income increased 16.1 percent on a year-on-year basis to Rs 1,360 crore, according to the update.
Its individual loan portfolio jumped 26.9 percent to Rs 34,513 crore. Mistry said the individual loans get repriced every quarter.
Mistry said construction finance has come down to nine percent of HDFC's total loans from 14 percent.
"The primary reason is that the period from 2017 to 2020 did see some amount of slowdown in demand for under construction properties in metros like Mumbai, Delhi and Bangalore... There were not that many new projects. Launches started again from 2021, and there has been a sharp pickup in the number of new projects being launched," said Mistry, who expects the lender's non-individual loans to pick up going forward.
The management is confident of maintaining the margin at stable levels.
"In lease rental discounting (LRD) loans, the disbursement is made upfront. Therefore, you will see growth in the non-individual loan book over a period of time... That is the guidance we given to investors for the last couple of quarters," he said.
HDFC shares rose by Rs 67.9 or three percent to Rs 2,350.9 apiece on BSE amid a broad-based rally on Tuesday.
