Private sector lender HDFC Bank on Saturday posted a smart 20% year-on-year jump in its net profit for the three months ended September 30 to Rs 10,606 crore, aided by a significant reduction in its provisioning. The bank’s provisions fell by 17% y-o-y to Rs 3,240 crore, of which Rs 3,000 crore was provided for non-payment on loans by borrowers.
The bank also saw a 10% y-o-y growth in its pre-provisioning operating profit (PPOP) to Rs 17,392 crore despite a modest 3% increase in its non-interest income, which stood at Rs 7,595 crore. The stunted growth in the bank’s other income was due to loss on sale of investments, despite a healthy increase of 17% in fee income.
The bank’s core net interest margin (NIM) was flat y-o-y at 4.1% on total assets, while its NIM based on interest earning assets was at 4.3% as of September 30. Net interest income in Q2FY23 grew by 19% y-o-y to Rs 21,021 crore owing to stellar 23% y-o-y growth in advances, much higher than the industry average of 16%, led by both retail and corporate segments.
The bank posted 19% y-o-y growth in its deposits, with deposit growth trailing close to the loan growth. Total deposits stood at Rs 16.7 trillion, with current account savings account (CASA) ratio at 45.4% as of September 30 as compared to 46.8% a year ago. Time deposits were at Rs 9.1 trillion, higher by 22% y-o-y.
The bank’s total capital adequacy ratio(CRAR) as per Basel III guidelines declined to 18% as on September 30 compared to 20% a year ago, but higher than the regulatory requirement of 11.7%. As of September 30, 2022, the bank’s distribution network was at 6,499 branches and 18,868 ATMs with 50% of the branches in semi-urban and rural areas.
The bank’s gross non-performing assets (NPA) stood at 1.23% as of September 30, lower by 12 bps y-o-y and 5 bps sequentially, while net NPAs were at 0.33%, lower by 7 bps y-o-y and 2 bps q-o-q. Provision coverage ratio stood at 73% as of September 30 as against 71% a year ago.
HDFC Securities, a retail broking subsidiary of the bank, posted net profit of Rs 191 crore in Q2FY23, lower by 20% y-o-y, while its revenues fell 4% to Rs 468 crore. HDB Financial Services, a non-deposit taking non-banking finance company (NBFC) of the bank, reported 15% y-o-y increase in its revenues during the quarter to Rs 2,201 crore, while its net profit increased by close to 150% to Rs 471 crore.