HDFC Bank's Q3 net profit surges 18% on growth in net interest income

India’s largest private sector lender HDFC Bank has recorded an 18 per cent rise in net profit at Rs 8,758.3 crore in the December quarter of the current fiscal year (Q3FY21), driven by robust growth in net interest income and other income. In the corresponding quarter last financial year, it had earned a net profit of Rs 7,416.5 crore. The net profit numbers for December quarter beat analysts expectation as Bloomberg had estimated 5 per cent rise in net profit for the bank over last year at Rs 7,818.2 crore.

Its pre-tax profit grew at 19 per cent in Q3FY21 over the same period last financial year to stand at 11,771.9 crore.

Net interest income of the lender saw a 15 per cent rise to Rs 16,317.6 crore in the reporting quarter, compared to Rs 14,172.9 crore in the same period last fiscal year due to robust growth in advances and a healthy net interest margin of 4.2 per cent. Other income of the lender rose upwards of 30 per cent to Rs 7,443.2 crore in Q3FY21, compared to Rs 6,669.3 crore in Q3FY20. Net revenue of the bank grew 14 per cent to Rs 23,760.8 crore in the December quarter (FY21), compared to Rs 20,842.2 crore in the same period last fiscal year.

The bank’s gross non-performing assets (NPAs) fell 27 basis points (bps) sequentially to end at 0.81 per cent in Q3FY21. In Q3FY20, gross NPA of the bank was 1.42 per cent. Net NPAs of the lender stood at 0.09 per cent, improving 9 bps sequentially and 38 bps year on year.

The bank has stated the restructuring sought by borrowers under the Reserve Bank of India’s (RBI) resolution framework for Covid-19 was approximately 0.5 per cent of its advances. And, if there was no standstill agreement on the classification of accounts as NPAs due to the apex court’s interim order, its GNPAs would have been 1.38 per cent in Q3FY21 and NNPs would have been 0.4 per cent.

Provisions and contingencies of the lender increased 12 per cent year on year to Rs 3,414.1 crore in Q3FY21, which included loan loss provision of Rs 691.2 crore and other general provision of Rs 2,722.9 crore. In the preceding quarter, the lender had made provisions to the tune of Rs 3,703.50 crore. Total provisions of the current quarter include contingent provisions of approximately Rs 2,400 crore for proforma NPAs.

The bank held floating provisions of Rs 1,451 crore and contingent provisions of Rs 8,656 crore as of December 31, 2020.

The bank’s advances portfolio saw an increase of Rs 15.6 per cent to Rs 10.8 trillion at the end of Q3FY21, with domestic advances growing by almost 15 per cent. While domestic retail loans grew 5.2 per cent, domestic wholesale advances clocked more than 25 per cent growth during this period. Deposits, on the other hand, grew 19.1 per cent to Rs 12.71 trillion. CASA deposits grew at almost 30 per cent and time deposits jumped more than 12 per cent in the same period.

Capital adequacy ratio of the bank at the end of Q3FY21 stood at 18.9 per cent, with tier I capital at 17.6 per cent.