HDFC Bank on Friday reported an 18.3% year-on-year (y-o-y) rise in its net profit for the quarter ended March 31, 2017 to Rs 3,990.09 crore on the back of a 21.5% growth in the net interest income (NII) to Rs 9,055.1 crore. NII is the difference between interest earned and interest paid by a bank. In what was seen as an unusual development, provisions at the bank nearly doubled on a Y-o-Y basis to Rs 1,261.8 crore. The management attributed much of the rise to general provisioning for standard assets and the deferred impact of a regulatory dispensation permitting delayed recognition of some small-ticket bad assets.
On a sequential basis, provisions grew 76.3%. Paresh Sukthankar, deputy managing director, said: “Of the Rs 550-crore increase in provisions sequentially, Rs 270 crore was on account of general provisions for standard assets and that reflected the almost Rs 60,000-crore increase in advances during this quarter.” Total advances stood at Rs 554,568 crore as of March 31, up 19.4% Y-o-Y. General provisions against standard assets in the corresponding quarter last year had stood at Rs 150 crore, Sukthankar said.
In addition, the bank had applied the Reserve Bank of India’s November dispensation to small-value loans worth Rs 245.21 crore in the December quarter, against which provisions worth Rs 100 crore were made in the March quarter. Provisions in the year-ago period were much lower, Sukthankar said, as the bank had the benefit of Rs 150 crore of floating provisions, which reduced the overall provision to that extent. Despite rise in provisions, the asset quality was largely unaffected, with gross non-performing assets (NPAs) remaining unchanged from the previous quarter at 1.05% of the loan book and net NPAs up by a basis point (bps) at 0.33%.
The net interest margin (NIM) rebounded to 4.3% from 4.1% in the December quarter. Sukthankar said the improvement in NIM reflected the growth in advances made during the quarter, a corresponding growth in low-cost current account savings account (CASA) deposits and relatively muted growth in higher-cost term deposits. Cuts in term deposit rates also helped margins. Current account deposits grew 30.7% Y-o-Y to Rs 1.15 lakh crore and savings account deposits rose by 30.9% to Rs 1.93 lakh crore. Term deposits saw an increase of 7.9% over the previous year.
Domestic retail loans and wholesale loans grew by 26.6% and 20.7%, respectively, with the domestic loan mix at 53:47 between retail and wholesale. Shares gain over 2%; m-cap surges by Rs 8,918 crore Shares of HDFC Bank rose by over 2% after it reported an 18.2% growth in its net profit. The stock gained 2.38% to end at Rs 1,496.75 on the BSE. During the day, it rose by 2.60% to Rs 1,500, its 52-week high level. On the NSE, it jumped 2.35% to close at Rs 1,496.60. The market valuation rose by Rs 8,918.03 crore to Rs 3,83,549.03 crore. In terms of volume, 5.15 lakh shares of the company were traded on the BSE and over 43 lakh shares changed hands on the NSE.