Private lender HDFC Bank on Saturday reported a 20.3 per cent increase in net profit to Rs 5,586 crore for the December quarter. The bank met profit estimates on the back of healthy growth in net interest income and a higher growth in other income.
The private sector lender had registered a net profit of Rs 4,643 crore in the year-ago quarter.
Net interest income for the quarter, which is interest earned less interest expended, increased by 22 per cent to Rs 12,577 crore, from Rs 10,314 crore in the previous fiscal year, the bank said in a filing to the exchanges.
The bank said the increase was driven by asset growth of 23.7 per cent and a core net interest margin of 4.3 per cent for the quarter under review.
Gross non-performing assets (GNPAs) as a percentage of gross advances stood at 1.38 per cent as of December 2018, compared to 1.33 per cent as of September 2018, and 1.29 per cent as of December 2017.
The bank saw slippages of Rs 4,000 crore during the quarter, said Sashidhar Jagdishan, chief financial officer of HDFC Bank, in a call with analysts. While the bank’s corporate, retail and SME portfolios have been stable, the agricultural segment is likely to see a spike in NPAs from the June quarter.
The bank had made a contingency of Rs 335 crore during the quarter on account of anticipated losses in the agriculture portfolio, he added. Provisions and contingencies for the quarter stood at Rs 2,211.53 crore, up 63 per cent, as against Rs 1,351.44 crore for the year-ago quarter and Rs 1,819.96 crore in the previous quarter.
The bank’s provision coverage ratio as on December 31, 2018 was 70 per cent.
Other income for the quarter ended December grew 27.2 per cent to Rs 4,921 crore. The bank said that the higher growth in other income was largely on account of the payments business, in which the spreads on the issuing side have increased and losses on the acquiring side have reduced.
Jagdishan also said that the bank has re-examined its cash management business, which has lifted its fee income.
Operating profit for the quarter rose to Rs 10,778 crore, a rise of 27.5 per cent over the year-ago quarter. Operating expenses stood at Rs 6,719.3 crore, an increase of 17.2 per cent over the Rs 5,732 crore posted last year.
Total deposits for the quarter grew 22 per cent to Rs 8.52 trillion, while total advances grew 24 per cent to Rs 7.8 trillion over the year-ago period.
The bank’s term deposits grew at 29 per cent to Rs 5.05 trillion, while Current Account and Savings Account(CASA) deposits grew at 13 per cent with savings account deposits at Rs 2.35 trillion and current account deposits at Rs 1.12 trillion.
The bank saw a fall in share of CASA deposits to 40.7 per cent of total deposits as of December 2018, against 44 per cent as of December 2017.
The bank said that the fall in CASA ratio is not a matter of concern for the bank since it is able to pass on the higher cost of funds.
The cost-to-income ratio for the quarter was at 39.5 per cent, as against 41.2 per cent for the corresponding quarter ended December 31, 2017.
The bank’s total capital adequacy ratio stood at 17.3 per cent as of December 2018, against 15.5 per cent as of December 2017.