HDFC Bank adds 2% after PAT jumps 27% in September quarter

Provisions in the quarter, however, rose 3.33 per cent 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

Shares of private lender HDFC Bank rose 2.3 per cent at Rs 1,257 apiece on the BSE on Tuesday after the bank reported strong September quarter results on Saturday.

The bank's standalone net profit jumped 26.8 per cent year-on-year (YoY) to Rs 6,345 after providing Rs 2,652.40 crore for taxation. Its profit in the year-ago quarter stood at Rs 5,005.73 crore profit. According to the management, the impact of recent tax rule changes on its profitability was about Rs 450 crore.

"HDFC Bank reported an in-line quarter in 2QFY20 –PAT grew 27 per cent YoY (PBT growth was at 17.5 per cent YoY). Topline growth was a tad soft in the quarter (+15 per cent YoY) as net interest margin (NIM) contracted c.10bps QoQ to 4.2 per cent. Management attributed the contraction in NIMs to the excess liquidity (LCR at 133 per cent) carried by HDFC Bank," analysts at JM Financials wrote in a result review note. 

The bank's deposits grew 23 per cent, and advances rose 19.5 per cent year on year. 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.

While the asset quality remained stable on a sequential basis with gross non-performing assets (GNPA) coming at 1.38 per cent of the total advances, as against 1.40 per cent in the June quarter, the provisions rose 3.33 per cent 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. 

Analysts at Prabhudas Lilladher expected the provisions to jump 3.8 per cent on a yearly basis but decline nearly 28 per cent sequentially to be Rs 1,890 crore in the recently concluded quarter.

At 9:43 m, the stock was trading 1.3 per cent higher at Rs 1,245 per share, as against a 0.07 per cent decline in the S&P BSE Sensex. About 3.2 million shares have changed hands on the BSE and NSE till the time of writing of this report.