HDFC Bank's PBT surges 17% in Q2FY20; asset quality remains stable

Deposits grew 23%, and advances rose 19.5% year on year

Private sector lender HDFC Bank on Saturday reported a 17.47 per cent rise in its profit before tax (PBT) for the quarter ended September 30, riding on healthy loan book growth and other income. PBT for the period under review stood at Rs 8,997.40 crore, as against Rs 7,659 crore in the year-ago period. Net profit (after tax) rose about 27 per cent to Rs 6,345 crore, meeting analysts’ expectations.

The bank’s asset quality remained stable on a quarter-on-quarter (QoQ) basis with gross non-performing assets (GNPA) of 1.38 per cent of the total advances, as against 1.40 per cent in the June quarter. Provisions in the quarter rose 3.33 per cent on a QoQ basis to Rs 2,700.81 crore. These included specific loan-loss provisions of Rs 2,038 crore and general and other provisions of Rs 662.7 crore.

“The bank maintains 114 per cent of total provisions of the gross NPA and doesn’t see any trouble,” the bank management told analysts in a call. According to the management, the impact of recent tax rule changes on its profitability was about Rs 450 crore. 

Net interest income (NII), or the difference between interest income and interest cost, for the bank rose about 15 per cent to Rs 13,515 crore from Rs 11,763 crore in the corresponding quarter a year ago. Its net interest margin (NIM), or the difference between yields on advances and cost of deposits, was 4.2 per cent, slightly down from its first quarter’s NIM of 4.3 per cent.  

The cost to income ratio for the quarter was 38.8 per cent, as against 39.9 per cent in the year-ago quarter. Other income (non-interest revenue) in the bank showed a healthy rise of 39.17 per cent to Rs 5,588.7 crore. In the ‘other income’, fees & commissions was Rs 4,054.5 crore for the second quarter, against Rs 3,295.6 crore in the corresponding quarter of the previous year. 

Commenting on the slight decline in the cost to income ratio the management said the bank had focused on “taking more deposits which add to the cost and also impact the margins."

Deposits grew 23 per cent, and advances rose 19.5 per cent year on year.

The bank witnessed a healthy 22 per cent growth rate in its personal loan segment, which stood at Rs 1,020 crore. Total retail advances of the bank stood at Rs 4,606 crore, rising 14 per cent YoY. The bank management maintained that they saw robust growth in both the retail and corporate loan books in the second half of FY20.

“The bank is lending to the power, telecom and NBFCs sectors and is witnessing good demand from the rural and semi-urban areas,” the management said.