HDFC Bank Q4 Net Up 20% on Trea­sury, In­ter­est Gains

Net in­ter­est in­come grew 24%; re­tail fo­cus to help bank ben­e­fit from ris­ing consumer spend

The Economic Times - - Markets: Beating Volatility -

Joel Re­bello & Saloni Shukla

Mum­bai: HDFC Bank, In­dia’s most valu­able bank, said its March quar­ter earn­ings rose 20% in line with ex­pec­ta­tions as both its cor­po­rate as well as re­tail lend­ing are ac­cel­er­at­ing.

The bank said its net profit in the fourth quar­ter ad­vanced to .₹ 3,374 crore from .₹ 2,807 crore in the year ear­lier as in­come from trea­sury also in­creased along with in­ter­est in­come on loans, which mostly drove prof­its.

Prof­its were in line with ex­pec­ta­tions with a 20% growth — a new nor­mal for the bank — which had logged 30% growth for many years, said Rahul Shah, vice pres­i­dent, equity ad­vi­sory at Moti­lal Oswal. HDFC Bank will con­tinue to ben­e­fit from the ris­ing con­sumerism in In­dia due to its re­tail fo­cus, Shah said in a note, post the re­sults. The bank led by Aditya Puri has re­mained an out­per­former amidst a cri­sis in the In­dian bank­ing in­dus­try which is grap­pling with bad loans from cor­po­rate lend­ing. The bank was once known for a con­sis­tent 30% rise in earn­ings. How­ever, HDFC Bank’s pace of


profit growth has slack­ened too, a sign that it has not man­aged to es­cape the eco­nomic down­turn com­pletely.

“Clearly, the 30% was at a time when the nom­i­nal GDP growth was clearly in the teens, the sys­tem loan growth used to be in the low 20s and we grew 4-5% faster than that,” Paresh Suk­thankar, joint, man­ag­ing di­rec­tor, said. “Right now, given the pace at which the econ­omy is grow­ing, our grow­ing at roughly 20% ac­tu­ally means that the delta growth is higher to­day than when we were grow­ing 30% in ab­so­lute.”

Net in­ter­est in­come, or the dif­fer­ence be­tween in­ter­est earned on loans and that for de­posits, grew 24% to .₹ 7,453 crore from .₹ 6,013 crore last year as both re­tail and cor­po­rate loans in- creased at a fast 30% and 27%, re­spec­tively. HDFC Bank has de­clared a div­i­dend of .₹ 9.50 per equity share for the year. The bank’s per­for­mance was bet­ter across the board with the whole­sale and re­tail bank­ing aid­ing the trea­sury gains. Its pre­tax prof­its from trea­sury jumped 30% to .₹ 373 crore from .₹ 288 crore a year ear­lier.

Cor­po­rate bank­ing, its new thrust area, saw pre-tax earn­ings climb 9% to .₹ 2,038 crore from .₹ 1,876 crore a year ear­lier. It has hired K Bala­sub­ra­ma­nian of Citibank to push lend­ing to big com- pa­nies, in­clud­ing multi­na­tion­als with whom he has built re­la­tion­ships over the years at Citi.

Re­tail bank­ing, which has be­come a fo­cus area even for the state-run banks in the ab­sence of cor­po­rate de­mand, looked up for HDFC Bank. Pre-tax earn­ings in lend­ing to cars and per­sonal loans climbed faster at 41% to .₹ 2,264 crore.

“Per­sonal and credit cards have both grown well and we have seen that trac­tion al­most con­tin­u­ing now for more than a cou­ple of quar­ters,” Suk­thankar said.

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