HDFC Bank In­dia Dec quar­ter profit up 20pc

The Pak Banker - - BUSINESS -

HDFC Bank Ltd, In­dia's most valu­able len­der, said fis­cal third-quar­ter profit rose 20%, in line with an­a­lysts es­ti­mates.

Net profit rose to Rs.3,356.8 crore in the three months ended 31 De­cem­ber from Rs. 2,794.5 crore in the year ear­lier. A Bloomberg poll of 31 an­a­lysts ex­pected HDFC Bank to re­port a net profit of Rs.3,350 crore. Net in­ter­est in­come (NII), the core in­come a bank earns from its lend­ing busi­ness, grew 24% to Rs.9,940.7 crore. The growth in NII was driven by a 25.7% growth in loan disbursals to an out­stand­ing of Rs.4.36 tril­lion as of 31 De­cem­ber. Retail loans formed 53% of to­tal ad­vances while the rest were to cor­po­rates. The pri­vate len­der's cor­po­rate loan book ex­panded at a slower pace of 18.9%. Paresh Suk­thankar, deputy man­ag­ing di­rec­tor, said the growth in the len­der's cor­po­rate book is still largely driven by short-term work­ing cap­i­tal loans. "The bet­ter placed com­pa­nies in most sec­tors con­tinue to see work­ing cap­i­tal loans. Clearly, we have not seen a pick-up in capex re­lated loans," said Suk­thankar in a con­fer­ence call with the me­dia.

The bank's retail book con­tin­ued to ex­pand at a faster pace of 29.2% driven mainly by car loans and busi­ness bank­ing both of which grew by about 23%. A bounce back in com­mer­cial ve­hi­cle loans also boosted retail loan ex­pan­sion. "But we are not chang­ing the risk pro­file of what we are do­ing. Our as­set qual­ity on the retail port­fo­lio is fairly sta­ble," said Suk­thankar. The bank con­tin­ued to re­port strong as­set qual­ity. Gross non-per­form­ing as­sets (NPAs) as a per­cent­age of to­tal ad­vances of the bank was 0.97% for the quar­ter ended 31 De­cem­ber, down marginally from 0.99% in the cor­re­spond­ing pe­riod in 2014. Gross NPAs rose marginally from 0.91% in the pre­ced­ing Septem­ber quar­ter.

The marginal in­crease in bad loans com­pared with the pre­vi­ous quar­ter was be­cause of slip­pages in agri­cul­ture loans and credit card re­pay­ments, Suk­thankar said. Net bad loans as a per­cent­age of to­tal loans was at 0.29% for the De­cem­ber ended quar­ter com­pared to 0.25% in the pre­vi­ous quar­ter and 0.28% in the year ago quar­ter. Not­with­stand­ing its steady as­set qual­ity, the pri­vate len­der in­creased to­tal pro­vi­sions and con­tin­gen­cies to Rs.653.9 crore from Rs.560.4 crore. HDFC Bank has been con­sis­tently in­creas­ing pro­vi­sions in the last six quar­ters.

Suk­thankar said that the bank didn't have to rec­og­nize any loans as bad af­ter the Re­serve Bank of In­dia's lat­est di­rec­tive that man­dated banks to treat vis­i­bly stressed loans as bad and pro­vide for them. Other in­come, which is in­come earned in fees, trad­ing in for­eign ex­change and gain on reval­u­a­tion or sale of in­vest­ments grew by 13.3% to Rs.2,872.2 crore, the bank said in an ex­change fil­ing on Mon­day. Driv­ing the bank's other in­come growth was earn­ings from fees and com­mis­sions, which forms the largest chunk. This grew by 11% to Rs.2,004.8 crore. The bank also gained Rs.327.9 crore through reval­u­a­tion and sale of in­vest­ments dur­ing the quar­ter.

The bank's cur­rent and sav­ings ac­count (CASA) de­posits, the cheap­est source of funds for the bank, in­creased marginally to 39.9% for the De­cem­ber quar­ter from 39.6% of to­tal de­posits in the quar­ter ended 30 June. To­tal de­posits posted a growth of 26.5%, cur­rent ac­count bal­ances grew by 29.7% and sav­ings ac­count de­posits grew by 20.6%. The jump in cur­rent ac­count was due to col­lec­tions for taxfree bond sales, ad­justed to which the growth would be about 23%, Suk­thankar said.

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