The bank's NBFC subsidiary HDB Financial Services posted a net profit of Rs 222 crore in Q1, down from Rs 228 crore in the March quarter.
HDFC Bank on Saturday reported a 21% year-on-year (y-o-y) growth in net profit for the quarter ended June to Rs 5,568 crore on the back of a 23% y-o-y rise in total income to `32,362 crore. However, the bank’s provisions shot up 60% y-o-y to Rs 2,614 crore and its current account savings account (CASA) ratio slipped below 40% to 39.7% from 42.4% at the end of March.
In a statement, HDFC Bank said the key components for provisions for the quarter were specific loan loss and contingent provisions of Rs 2,413.5 crore, as against `1,432 crore for the corresponding quarter of the previous year, and general provisions worth Rs 200 crore, as against `183 crore for Q1FY19. “General provisions include additional provisions of `85.9 crore for standard advances to the NBFC (non-banking financial company)/HFC (housing finance company) sector,” the lender said.
On a conference call with analysts, the bank management said vehicle loans have seen tepid growth for the last couple of quarters. “Even the vehicle manufacturers don’t have a clarity on demand. Some are saying it happens once in four years. Having said that when you look at other numbers, you see some slowdown. We have to wait and watch how it is over a couple of quarters,” company officials said. They added that the lender is cautious on lending to NBFCs.
“Our NBFC loan portfolio continues to be good. We are cautious on the sector and continue to remain so. Our portfolio is not troubling us,” they observed.
The bank’s net interest income (NII), or the difference between interest earned and interest expended, also rose 23% y-o-y to Rs 13,294 crore. Non-interest income grew 30% to Rs 4,970 crore. Core net interest margin (NIM) in Q1 fell to 4.3% from 4.4% at the end of June.
Asset quality performance was a mixed bag, with the gross non-performing asset (NPA) ratio falling two basis points sequentially to 1.4% and the net NPA ratio rising four bps to 0.43%. The bank held floating provisions of Rs 1,451 crore as on June 30. Total provisions — comprising specific provisions, general provisions and floating provisions — were 115% of the gross NPAs as on June 30.
Total advances grew 17% y-o-y to Rs 8.3 lakh crore at the end of June. Retail loans constituted 54% of the loan book, while 46% came from wholesale loans. “Advances to the vehicle loan segment, where sales volumes have seen some moderation, grew at 8.3% over the previous year,” the bank said. Growth came from both the retail and wholesale segments, which grew 16.5% and 19.6%, respectively.
Total deposits as on June 30 were Rs 9.55 lakh crore, an increase of 18.5% over June 30, 2018. Current account savings account (CASA) deposits grew 13% y-o-y, with SA deposits at Rs 2.53 lakh crore and CA deposits at Rs 1.26 lakh crore. Time deposits stood at Rs 5.76 lakh crore, an increase of 22.5% over the previous year, resulting in CASA deposits comprising 39.7% of total deposits as on June 30, down from 42.4% at the end of March.
HDFC Bank’s total capital adequacy ratio (CAR) as per Basel III guidelines was at 16.9% as on June 30, 2019, up from 14.6% on June 30, 2018 and as against a regulatory requirement of 11.075%. The CAR includes capital conservation buffer (CCB) of 1.875% and an additional requirement of 0.2% on account of the bank being identified as a domestic systemically important bank (D-SIB). Tier 1 CAR was at 15.6% as of June 30, 2019, compared to 13.1% as of June 30, 2018. Common equity tier 1 (CET 1) ratio was at 14.8% as of June 30, 2019. Risk-weighted assets were at Rs 9.66 lakh crore, up 13.6% from Rs 8.45 lakh crore on June 30, 2018.
The bank’s NBFC subsidiary HDB Financial Services posted a net profit of Rs 222 crore in Q1, down from Rs 228 crore in the March quarter. Its net interest income grew 13% sequentially to Rs 963 crore As on June 30, HDB Financial’s balance sheet size was at Rs 58,833 crore. The gross loan book grew by 23% yo-y to Rs 56,287 crore as on June 30. Gross impaired loans were at 2.3% of gross loans and net impaired loans were at 1. 7% of net loans as on June 30. Total CAR was at 18.1 %, with tier-I CAR at 12.5%.