Higher provisions crimp HDFC Bank bottomline, net up 20.6%

The second largest private sector lender HDFC Bank continued to witness a jump in provisions for bad assets for the second consecutive quarter, but healthy increase in both interest and non-interest incomes saw its June quarter profit rising 20.7 per cent to Rs 2,695 crore.
The bank today said its core net interest income rose 23.5 per cent to Rs 6,389 crore, while the non-interest component was up 33 per cent at Rs 2,462 crore on a five-fold jump in sale of investments.
Total income rose by 26.3 per cent to Rs 16,503 crore.
However, the jump in provisions to Rs 728 crore as against Rs 482 crore in the year-ago period restricted the bottom-line growth, the bank said.

The provisions for the quarter included Rs 557.5 crore for specific loan losses, general provisions of Rs 96 crore, floating provisions of Rs 65 crore and other provisions of Rs 9.5 crore, the bank said in a release.
"Provisions have gone up but a large portion of those are floating provisions .. Specific provisions have not gone up. Major increase came in the floating provisions which are not specific to any strain in the portfolio," managing director and chief executive Aditya Puri told reporters here this evening on the sidelines of the AGM of the bank.

"The bank is not showing any signs of stress. The marginal difference in NPAs will happen quarter to quarter depending upon some account goes in one quarter or another," Puri added.

"Are you asking us is there a strain and we see it continuing? The answer is no!" Puri said in reply to a question.
The bank witnessed a decrease in the gross non performing assets ratio at 0.95 per cent as against the 1.07 per cent in the year-ago period.
Puri said there has been a slowdown in the corporate credit growth, but attributed this to the sluggish economic growth and added that things are looking up for the economy.
"What is positive is that we are at the cusp and I think we are going to see an uptick in GDP growth. The government has started spending, the road projects are moving, the power projects are moving, mines have started, state-run enterprises are going to invest in projects," he said, expecting growth to accelerate to up to 7.8 per cent this year from 7.3 per cent last year.

On interest rates, Puri said borrowers should expect another cut of up to 0.75 per cent by the year end.
He said banks are flush with liquidity and are investing the excess in money market instruments like commercial paper.
The bank scrip shed 1.52 per cent to close at Rs 1,098.60 on the BSE, as against a 0.84 per cent correction in the benchmark Sensex.