HDFC Bank Q3 profit increases 20% to Rs 2,794 cr
Increase in profit came from other income and net interest income, bank sees pickup in retail growth
 "HDFC Bank Q3 profit increases 20% to Rs 2,794 cr")
HDFC Bank, India’s second largest private sector bank, has reported a 20 per cent growth in net profit in October-December quarter to Rs 2,794.5 crore. The increase in profit came on the back of a higher other income and net interest income.
The profit was higher than Street estimates. Bloomberg had pegged net profit at Rs 2,770 crore.
The net interest income — the difference between interest income and interest expenditure — grew 23 per cent to Rs 5,699.9 crore compared to Rs 4,634.8 crore in the third quarter of the past financial year.
Even the other income for the bank that includes fees, commissions, forex gains, etc., grew 18 per cent in the quarter ended December to Rs 2,534.9 crore as compared to Rs 2,148.3 crore.
Net interest margin, a key indicator of profitability, also expanded to 4.4 per cent as compared to 4.2 per cent in the third quarter last financial year.
Asset quality remained stable with gross non-performing assets (NPAs) at 0.99 per cent of gross advances at the end of the third quarter as compared to 1.01 per cent in the same period a year ago. NPAs were at 0.26 per cent of net advances at the end of the December quarter. Total restructured loans (including applications under process for restructuring) were at 0.1 per cent of gross advances in the period under review compared to 0.2 per cent at the end of the December quarter last financial year.
Provisions had increased 44 per cent to Rs 560 crore at the end of the December quarter compared to Rs 388 crore in the same period a year ago. However, the management explained that the increase was mainly due to a smaller base late year. “The increase in provision seems to be much higher because in the third quarter of last year there was a reversal of provision of Rs 320 crore in Q3FY14. So, if you add that amount, then the increase is not much,” said Paresh Sukthankar, deputy managing director, HDFC Bank
The profit was higher than Street estimates. Bloomberg had pegged net profit at Rs 2,770 crore.
The net interest income — the difference between interest income and interest expenditure — grew 23 per cent to Rs 5,699.9 crore compared to Rs 4,634.8 crore in the third quarter of the past financial year.
Even the other income for the bank that includes fees, commissions, forex gains, etc., grew 18 per cent in the quarter ended December to Rs 2,534.9 crore as compared to Rs 2,148.3 crore.
Net interest margin, a key indicator of profitability, also expanded to 4.4 per cent as compared to 4.2 per cent in the third quarter last financial year.
Asset quality remained stable with gross non-performing assets (NPAs) at 0.99 per cent of gross advances at the end of the third quarter as compared to 1.01 per cent in the same period a year ago. NPAs were at 0.26 per cent of net advances at the end of the December quarter. Total restructured loans (including applications under process for restructuring) were at 0.1 per cent of gross advances in the period under review compared to 0.2 per cent at the end of the December quarter last financial year.
Provisions had increased 44 per cent to Rs 560 crore at the end of the December quarter compared to Rs 388 crore in the same period a year ago. However, the management explained that the increase was mainly due to a smaller base late year. “The increase in provision seems to be much higher because in the third quarter of last year there was a reversal of provision of Rs 320 crore in Q3FY14. So, if you add that amount, then the increase is not much,” said Paresh Sukthankar, deputy managing director, HDFC Bank
Sukthankar said the bank is well capitalised now and does not have any other capital raising plans in the near term.
HDFC Bank has also articulated that there might be a revision in base rate by the end of the fourth quarter. “By March, there is a possibility that base rates may come off. But this is taking into account other assumptions such as deposit rate reduction will also happen and there may be change in policy rates,” explained Sukthankar
Deposits grew 18.6 per cent to Rs 4,14,128 crore and advances grew by 17 per cent to Rs 3,47,088 crore at the end of the third quarter of this financial year. The share of current and savings account was down from 43.7 at the end of December 31, 2013 to 40.9 per cent at the end of third quarter this financial year. The management said current and savings account (Casa) under pressure because of the increase in the demand for fixed deposit witnessed in the third quarter.
The loan mix between retail and wholesale was 51:49. The management said in this quarter, the growth in the retail portfolio has outpaced the growth in the wholesale segment.
“We have seen a pickup in retail loans but this may be on account of festive season and it will take a couple of more quarters to see any broad based recovery,” said Sukthankar.
HDFC Bank’s total capital adequacy ratio at the end of the December quarter as per Basel- III norms was 15.7 per cent.