HDFC Bank Q3 net profit up 15%

Achieved on the back of higher interest income

HDFC Bank, the country’s second-largest private sector lender, on Tuesday reported a 15 per cent jump in its net profit at Rs 3,865.3 crore for the quarter ended December, on the back of higher interest income.

Net interest income ( the difference between interest earned and interest expended) during the quarter increased 17.6 per cent to Rs 8,309.1 crore, from Rs 7,068.5 crore a year ago. This was led by an average assets growth rate of 18.6 per cent. 

Other income, which includes fees and commissions, grew 9.4 per cent to Rs 3,142.7 crore. Paresh Sukthankar, deputy managing director of HDFC Bank, said other income grew at a tepid pace. “As a result of demonetisation, there was impact on fee income, as the banks had to waive ATM fee withdrawal, the merchant discount rate and the card fees as well,” he added.

Asset quality remained stable with the proportion of gross non-performing assets (NPA) in gross advances at 1.05 per cent, compared to 1.02 per cent at the end of quarter ended September. In the same period, net NPAs inched up slightly to 0.32 per cent, compared to 0.30 per cent in the previous quarter

Provisions and contingencies for the quarter ended December inched up slightly to Rs 715.8 crore (consisting of specific loan loss provisions of Rs 694.4 crore, general provisions Rs 9.3 crore and other provisions Rs 12.1 crore), compared to Rs 653.9 crore in the same quarter a year ago.

Net interest income, a key indicator of a bank's profitability, was at 4.1 per cent for the quarter. On a sequential basis, net interest margins (NIMs) were lower by 10 basis points and as compared to the same quarter in the last financial year the margins were lower by 20 bps. 

The management said NIMs in this quarter were lower because of the outflow of FCNR (B) deposit worth $3 billion. The additional cash reserve ratio (CRR) requirement for a period of two weeks due to demonetisation also put pressure on margins, Sukthankar said.

However, as a result of demonetisation, the bank saw a spurt in deposits, which rose 21.1 per cent year-on-year (y-o-y) to Rs 6.34 lakh crore, after considering the FCNR (B) maturities during the same quarter. 

The management also said there was a spurt in the bank's low-cost CASA (current account and savings account) deposits, largely due to demonetisation, with current account deposits growing by 36.7 per cent y-o-y and saving account deposits by 37.8 per cent.