HDFC Bank net up 20.5%

Net interest income, the difference between interest earned and expended, rose 21% to Rs 6,681 cr

HDFC Bank, the country’s second largest private sector lender, has reported a 20.5 per cent rise in net profit to Rs 2,869 crore for the July-September quarter, as compared to Rs 2,381 crore in the same quarter of 2014-15. However, this rise was below Street estimates. A Bloomberg consensus figure was for Rs 2,896 crore.

Net interest income, the difference between interest earned and expended, rose 21 per cent to Rs 6,681 crore. Other income (from fees, commissions, etc.) rose 28 per cent to Rs 2,552 crore, led by higher income from foreign exchange and derivatives revenue.

Net interest margin (NIM), a key indicator of profitability, was 4.2 per cent, 10 basis points (bps) lower than the same quarter last year. Paresh Sukthankar, deputy managing director, said their cut in the base rate (BR) by 50 bps in the quarter led to a fall in this. “(Also) a strong increase in fixed deposits, which took the share of low-cost current and savings account deposits lower; this also had an impact on the NIMs,” he said.

Sukthankar added there was further scope for revision in the BR. “The rate needs to be calibrated once a quarter since deposits (rates) are trending downwards. There is scope (for) further reduction.”

Asset quality remained largely stable. Gross non-performing asset (NPA) declined to 0.91 per cent from 1.02 per cent in the September quarter a year ago. Net NPA also fell to 0.25 per cent from 0.28 per cent in the corresponding quarter last year. However, provisions for bad loans in the quarter rose 49.4 per cent to Rs 681 crore from last year but declined 6.4 percentage points on a sequential basis. There was a specific loan loss provision of Rs 484 crore, general provisions for Rs 133 crore, floating provisions for Rs 50 crore and others of nearly Rs 14 crore.

Advances were up 28 per cent over a year before to Rs 4.18 lakh crore, driven by domestic retail loans and wholesale loans. The former grew 29.3 per cent and wholesale loans by 23.4 per cent. Credit offtake in the banking sector had risen a little less than 10 per cent. Sukthankar said growth in loans was due to a diversified book, a competitive BR, better distribution, and an array of new and quicker loan products on the digital end.

Deposits rose 30 per cent to Rs 5.06 lakh crore. The capital adequacy ratio was a healthy 15.5 per cent. Unlike many other private lenders, HDFC Bank is not looking for a partnership with the newly licensed payments banks. “We believe we are a payments banks and a universal bank on our own,” said Sukthankar.

The management declined comment on the probe being carried out in the money laundering scam that involves an HDFC Bank employee.