Also Read: RBI steps good sign for eco, but repo rate may rise: HDFC
According to him, interest rates don't make much of a difference in a person's decision to buy a house. He says it is more to do with consumer confidence than interest rates.
Below is the verbatim transcript of Keki Mistry's interview on CNBC-TV18
Q: You raised your rates marginally on August 22. How is business, what kind of loan growth are you factoring in, in the second half of the year?
A: We have always talked of a growth of around 18-20 percent. We actually had a growth which is much higher in the past. We are confident that the 18-20 percent growth will certainly continue. We are hopeful that the growth will be higher than that.
Q: I am asking because there is severe pressure in the market, discretionary spends and mounting home inventories, residential inventories gives the feeling that things are more difficult today than they were in the past three-four years. Therefore do you think that there is a challenge especially because you have had to raise your rates?
A: I do not think interest rates make that much of a difference in a person's decision to buy a house. If we take last year as an example, last year interest rates were broadly where they are now because we dropped rates and then we raised rates. So, they are broadly where they are now and we had a growth of 31 percent in that period. I think it is more to do with consumer confidence rather than interest rates.
Q: That is the point which is very weak now, investor confidence as well as genuine slowdown conditions in the economy. Therefore, do you think this is particularly more pressured here?
A: If you look at the slowdown; the slowdown is more with the businessmen. Salaried employees, they are middle income salaried employees, so long people have jobs and they want to buy a house, people will buy house. I cannot get into numbers because the results are in a week's time; we have to wait for the week and see the numbers but the growth has not been as bad as you have seem to thinking.
Q: In terms of concerns that the analyst fraternity has had, it is more to do with your margins since last quarter there was a bit of a slippage in the net interest margins to below 4 percent level although you cannot give us explicit numbers but do you think that this pressure albeit marginal could continue for the next couple of quarters?
A: We talk of a spread rather than margin. Margin is impacted by things like how much capital you have and with every passing year the quantum of shareholders' fund - there is a percentage of total fund keeps reducing because you not raise equity and because of that the net interest margins tends to go down by 2-3 bps a year. It's a simple arithmetic.
But if we look at spreads, we have always guided our investors towards spread which would be in the range of 2.2 to 2.3. A wider range is 2.15 to 2.35 and I would be fairly confident that that range will be more than adequate. Now whether it's at the higher end of the range, lower end of that range is something we will have to wait and see.
On October 14, 2013, at 14:15 hrs Housing Development Finance Corporation was quoting at Rs 802.50, down Rs 7.75, or 0.96 percent. The 52-week high of the share was Rs 931.00 and the 52-week low was Rs 632.20.
The company's trailing 12-month (TTM) EPS was at Rs 32.21 per share as per the quarter ended June 2013. The stock's price-to-earnings (P/E) ratio was 24.91. The latest book value of the company is Rs 160.46 per share. At current value, the price-to-book value of the company was 5.00.
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