Housing Development Finance Corp Ltd ( HDFC ), India's top mortgage lender, posted a 10 percent 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 percent 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's chief executive officer, 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 12.66 billion rupees compared with 11.51 billion rupees a year ago, falling short of market estimates of 12.96 billion rupees according to Thomson Reuters I/B/E/S.
Total income rose 13 percent to 58.6 billion rupees, as its loan book grew 19 percent to 1.85 trillion rupees. HDFC's net interest margins, a measure of profitability, narrowed 10 basis points to 4.1 percent over the same period.
Shares in HDFC closed 0.2 percent higher at 821.15 rupees in a BSE Sensex.