HDFC Bank Q4 net up 30%

HDFC Bank, the second-largest private sector lender in the country, on Wednesday said its net profit for the quarter ended March 31 expanded 30.4 per cent to Rs 1,453 crore from Rs 1,115 crore a year earlier. Lower provisions, higher fee income, and growth in interest income from advances aided the bank's earnings during the quarter.

The lender’s net profit grew 31.6 per cent to Rs 5,167 crore during the financial year 2011-12 (April-March).

Net interest income, or the difference between interest income and interest expense, was at Rs 3,388 crore during the quarter, up 19.3 per cent from a year ago. Net interest margin improved by 10 basis points sequentially but remained flat on a year-on-year basis at 4.2 per cent.

“Going forward, we expect our margin to stay in the narrow range of 3.9-4.2 per cent,” Paresh Sukthankar, executive director at HDFC Bank, said in his post-earnings comments.

The bank’s other income grew 18.8 per cent year-on-year driven by higher income from fees and commissions. Fee income was up 23.7 per cent aided by growth in transaction banking, cash management, trade, and merchant banking operations.

Operating expenses increased by 23.5 per cent from a year earlier as the bank opened more branches to support its expansion plans. HDFC Bank closed January-March quarter with 2,544 branches and 8,913 automated teller machines (ATMs) across 1,399 cities. The cost-to-income ratio also increased a tad to 49.8 per cent as of March-end from 48.9 per cent a year ago. Improved asset quality allowed the bank in reducing its provisions significantly during the quarter. It made provisions of Rs 298 crore, which was 31 per cent lower than a year ago. Total provisions included specific loan loss and floating provisions of Rs 292 crore.

The gross non-performing asset ratio improved by 10 basis points year-on-year to one per cent, while the net non-performing asset ratio remained steady at 0.2 per cent as of March-end. The provision coverage ratio was at 82.4 per cent.

Total restructured loans including the applications received and under process for restructuring were at 0.4 per cent of gross advances.

Business growth
Net advances of the bank expanded 22 per cent from a year ago, to Rs 195,420 crore, as of March-end. On a sequential basis the growth was muted. The growth in advances was driven by the retail segment. The share of retail loans in total advances improved to 55 per cent from 52 per cent a year ago. Sukthankar said in the current financial year the growth rate in HDFC Bank's loan portfolio would be a few percentage points higher than the industry average.

The Reserve Bank of India has forecasted industry credit growth at 17 per cent this financial year. HDFC Bank’s total deposits grew 18 per cent year-on-year to Rs 246,706 crore as of March 31. The share of low-cost current account savings account deposits was 48.4 per cent of total deposits, compared to 51 per cent a year back.

The bank closed the quarter with a capital adequacy ratio of 16.5 per cent.

The bank's shares gained 1.5 per cent in on Wednesday's trade and closed at Rs 538 on the National Stock Exchange.