At 21%, HDFC Bank net grows at slowest pace in over 10 years

Written by fe Bureau | Mumbai | Updated: Jul 23 2014, 17:15pm hrs
HDFC Bank on Monday reported a net profit of R2,233 crore for the quarter ended June 30, 2014, up 21.1% from the year-ago period. This is the private lenders slowest profit growth in over 10 years, with a steady decline reported over the last 12 quarters when it stood at 33.7% in Q1FY12.

The countrys second-largest private sector lender's net interest income the difference between interest earned and interest expended stood at R5,171.6 crore. However, other income fell 3.9% to R1,850.5 crore on account of lower bond gains as the yields have risen 100 bps to 8.72%. Other income of a bank is determined by factors such as bond gains and foreign exchange income.

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The bond gains were much lower this quarter at R25 crore against R200 crore in the corresponding quarter last year. On the other hand, there were lower volumes in the forex side, said Paresh Sukthankar, deputy managing director, HDFC Bank. Total income was up 12.7% and stood at R13,070.6 crore and operating profit grew 22.9% to R3,818.8 crore in the quarter under review against R3,106.6 crore in the same period last year.

Asset quality of the bank worsened in absolute terms, with gross NPAs rising 23.42% to R3,356.2 crore and net NPAs growing 46.15% to R1,007 crore in Q1 FY15. However, as a percentage of total loans, gross and net NPAs were under control at 1.1% and 0.3%, respectively.

Provisions for the June quarter increased to R482.7 crore from R286.1 crore in the previous quarter.

For starters, the sentiment has certainly improved and it is going to drive huge investments. The fact that the equity markets have been strong and would give promoters certain space to deleverage might be extremely important to trigger the next round of capex funding, Sukthankar said, adding that the environment is a little more favourable for the pickup in capex, but will take 3-5 quarters.

Total restructured loans (including applications under process for restructuring) were at 0.2% of gross advances as of June 30 against 0.2% in the same quarter last year.

The HDFC Bank scrip on the BSE ended at R828.05 on Monday, down 0.53% from the previous close.

Net interest margin for the bank stood at 4.4% for the three months ended June 30, same as in the same quarter last year, but a sequential dip of 20 bps. Total advances stood at R3,12,109 crore, a y-o-y increase of 20.7% with retail advances growing 6.98% to R1,50,247 crore. The domestic loan mix between retail and wholesale was 52:48 in Q1FY15.

HDFC Bank reported total deposits of R3,72,074 crore, an increase of 22.7% over Q1 FY14. While savings account deposits grew 18.1% over the previous year, current account deposits grew 18% over the previous year, taking the Casa ratio to 43% from 44.8% in Q4 of the last fiscal.