HDFC Bank sets aside Rs 100 cr for derivatives

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Mumbai, Apr 24: HDFC Bank, which posted a fourth quarter net profit of Rs 471.1 crore, made a provision of around Rs 100 crore on currency derivative trades.

“We have made a provisioning of Rs 172.7 crore for multiple contingencies, including around Rs 100 crore for a possible hit on account of domestic derivatives exposure. We have no exposure in any instruments like collateralised debt obligations and credit linked notes,” said a bank official.

The bank, which has been dragged to court by a few customers over derivatives, also set aside a small sum for litigation. “The amount is very small,” said Paresh Sukhtankar, executive director of HDFC Bank. Unlike other banks like Axis Bank and State Bank of India, HDFC Bank has not revealed any mark-to-market losses of its clients.

Provisions and contingencies for the quarter stood at Rs 465.1 crore (vs Rs.267.1 crore in Jan-March, 2007), comprising specific provisions for non-performing assets and general provisions for standard assets of Rs.293 crore and provisions for tax, legal and other contingencies of Rs 172.7 crore, the bank said in a statement.

With almost a 50:50 break-up of its retail and corporate business, the net profit of the bank for the full year was Rs 1,590.2 crore, up 39.3%, over the previous year. Net revenues (net interest income plus other income) for the quarter stood at Rs 2,191.4 crore, a rise of 51.2% over Rs.1,448.9 crore.

Other income (non-interest revenue) was up 39.3% to Rs 549.3 crore from Rs 394.4 crore.

The bank’s balance sheet size increased by 46%, from Rs 91,236 crore as of March 31, 2007 to Rs 1,33,177 crore as of March 31, 2008. This is excluding the balance sheet size of Centurion Bank of Punjab, which merged with HDFC Bank recently. Total deposits were at Rs 1,00,769 crore, an increase of 47.5% from March 31, 2007. The bank declared a dividend of 85%, up from 70% the previous year.