HDFC Bank profit up on other income boost

HDFC Bank, the country's second largest private sector bank, today reported a 34 per cent rise in its net profit in the first quarter of 2007-08 owing to robust increase in other income, despite net interest income showing slower growth.

The bank's net profit in the quarter ended June 30, 2007 increased to Rs 321.23 crore from Rs 239.30 crore a year earlier. The bank's year-on-year net profit growth in every quarter since June 2002 was in the 30-31 per cent range. 

THE BIG PICTURE
Rs crore	Quarter ended June
	2006	2007
Interest earned	1,504.29	2,125.88
Other income	290.92	515.82
Total income	1,795.21	2,641.70
Total expenses	1,239.38	1,858.02
Operating profit	555.83	783.68
Net profit	239.30	321.23
CAR (%)	11.70	13.10
EPS (Rs)	7.60	10.00

"The profit growth is higher because the balance-sheet has grown slightly faster than the last quarter and margins have improved slightly on a year-on-year basis. There has been a particularly strong growth in other income, resulting in net revenues growing at almost 40 per cent," said Paresh Sukthankar, country head, credit & market risk, HDFC Bank.

The net interest income for the quarter ended June 30 increased by only 27.47 per cent to Rs 1,042.2 crore from Rs 817.6 crore a year earlier, despite net interest margin having improved marginally to 4.2 per cent from 4.1 per cent a year earlier.

"There has been some impact of higher deposit growth. Also the average loans outstanding was at 24-25 per cent compared to the 32 per cent at the end of the June quarter due to lower March base, resulting in lower NII figures," said Sukthankar.

Interest costs and yields on advances have both increased by close to 1 per cent year-on-year resulting in a stable NIM. Net advances grew at 32.7 per cent to Rs 53,839 crore at the end of June 2007, with retail loans accounting for 57 per cent of the net advances.

"Retail advances have grown slightly slower at 30 per cent. The corporate book has grown faster due to high demand from corporates and better rates," said Sukthankar.

The bank's total income was up 47.15 per cent to Rs 2,641.7 crore in the first quarter of 2007-08, from Rs 1,795.2 crore a year earlier.

Other income increased 77.3 per cent to Rs 515.8 crore for the quarter-ended June 2007 from Rs 290.9 crore a year earlier.

While fee and commissions grew 28 per cent to Rs 372.2 crore, revenues from foreign exchange and derivatives were up 162 per cent to Rs 146.5 crore.

Loss on sale or revaluation of investments was at Rs 4.1 crore in June 2007 compared with Rs 62.2 crore a year earlier. Provisions and contingencies for the quarter increased 50 per cent to Rs 307.1 crore, of which Rs 299.7 crore was due to provisions for non-performing assets and standard assets, up from Rs 185.4 crore a year earlier.

The bank's deposit base grew 34.6 per cent to Rs 81,604 crore at the end of June 2007 from Rs 60,630 crore a year earlier. Current account and savings account (CASA) deposits accounted for 51.4 per cent of the total deposits.

The bank's total customer assets, including advances, corporate debentures, investments in securitised paper, increased 29 per cent to Rs 59,093 crore from Rs 45,764 crore a year earlier. NPAs remained stable at 0.4 per cent in the first quarter of 2007.

The bank added 69 branches during the quarter ended June 30, 2007, taking the branch network to 753 in 320 cities from 535 branches in 228 cities in June 2006.

At the end of June 2007, the bank's credit card base crossed Rs 30 lakh, while capital adequacy ratio (CAR) stood at 13.1 per cent, up from 11.7 per cent a year earlier.