HDFC Bank slips as asset quality weakens, provisions spike

Shares of the private lender fell 1.47% to Rs 1259.05 after the bank reported sharp spike in the provisions in Q3 December 2019.

HDFC Bank reported a 32.77% rise in net profit to Rs 7416.48 crore in Q3 December 2019 from Rs 5585.9 crore in Q3 December 2018. Profit before tax (PBT) for Q3 December 2019 was at Rs 9,901.90 crore. Adjusting for one-off credit items, the core PBT at Rs 10,401.90 crore, grew by approximately 21%.

Provisions and contingencies (excluding tax provisions) grew 37.62% on YoY basis to Rs 3043.56 crore in Q3 December 2019.

Gross non-performing assets (NPAs) stood at Rs 13427.25 crore as on 31 December 2019 as against Rs 12508.15 crore as on 30 September 2019 and Rs 10902.86 crore as on 31 December 2018.

The ratio of gross NPAs to gross advances stood at 1.42% as on 31 December 2019 as against 1.38% as on 30 September 2019 and 1.38% as on 31 December 2018. The ratio of net NPAs to net advances stood at 0.48% as on 31 December 2019 as against 0.42% as on 30 September 2019 and 0.42% as on 31 December 2018.

Net revenues (net interest income plus other income) increased by 19.1% to 20,842.20 crore for the quarter ended 31 December 2019 over the corresponding quarter of the previous year. Net interest income (interest earned less interest expended) for Q3 December 2019 grew 12.69% to Rs 14,172.90 crore from Rs 12,576.80 crore for Q3 December 2018, driven by growth in advances of 19.9%, and a growth in deposits of 25.2%. The net interest margin for the quarter remained stable at 4.2%.

Total deposits as of 31 December 2019 were Rs 10,67,433 crore, an increase of 25.2% over 31 December 2018. CASA deposits grew by 21.5% with savings account deposits at Rs 277,928 crore and current account deposits at Rs 143,900 crore.

The bank's capital adequacy ratio as per Basel III guideline was at 18.5% in Q3 December 2019 as against 17.3% in Q3 December 2018.

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