The continued slowdown in economic activity has led to a decrease in retail loan origination, sale of third party products, use of credit and debit cards by customers, efficiency in collection efforts and waivers of certain fees, the bank said.
Private sector lender HDFC Bank on Saturday reported a 19.6 per cent growth in net profit to Rs 6,658.62 crore from Rs 5,568.16 crore in Q1 FY20. Its net interest income (difference between interest earned and interest paid to depositors) increased 17.8 per cent for the first quarter of the financial year to Rs 15,665.4 crore from Rs 13,294.3 crore for the same period last financial year on the back of growth in advances of 20.9 per cent to Rs 10,03,299 crore and deposits of 24.6 per cent to Rs 11,89,387 crore.
The asset quality of the bank improved slightly with gross non-performing assets (NPA) standing at 1.36 per cent of gross advances as on June 30, 2020 vis-à-vis 1.40 per cent as on June 30, 2019 even as it was 1.26 per cent as on March 31, 2020. Net NPAs were at 0.33% of net advances as on June 30, 2020.
The other income also declined to Rs 4,075.3 crore (20.6 per cent of the net revenues) for Q1 from Rs 4,970.3 crore in the same quarter last year. Components in other income including fees & commissions fell Rs 2,230.7 crore from Rs 3,551.6 crore in Q1 last year, foreign exchange and derivatives stood at Rs 436.6 crore down from Rs 576.7 crore for the corresponding quarter last year, gain on sale / revaluation of investments was Rs 1,086.7 crore while miscellaneous income, including recoveries and dividend was Rs 321.3 crore in comparison to Rs 630.0 crore in Q1 last year.
“The continued slowdown in economic activity has led to a decrease in retail loan origination, sale of third party products, use of credit and debit cards by customers, efficiency in collection efforts and waivers of certain fees. As a result, fees/other income were lower by approximately Rs 2,000 crore,” HDFC Bank said. The lender had 5,326 branches and 14,996 ATMs/cash deposit and withdrawal machines (CDMs) in 2,825 cities as of June 30, 2020, against 4,990 branches and 13,727 ATMs/CDMs across 2,764 cities and towns as of June 30, 2019.