HDFC Bank on Tuesday reported a 20% year-on-year (y-o-y) growth in net profit for the quarter ended September to Rs 4,151.03 crore on the back of a 22% growth in net interest income (NII) to Rs 9,752.1 crore, even as the flexible structuring of a project loan in which the bank had participated weighed on asset quality.
HDFC Bank on Tuesday reported a 20% year-on-year (y-o-y) growth in net profit for the quarter ended September to Rs 4,151.03 crore on the back of a 22% growth in net interest income (NII) to Rs 9,752.1 crore, even as the flexible structuring of a project loan in which the bank had participated weighed on asset quality. NII is the difference between interest earned and interest paid by a bank. The net interest margin (NIM) fell marginally quarter-on-quarter (q-o-q) to 4.3% from 4.4% at the end of June. Provisions at the bank jumped 97% y-o-y to Rs 1,476.19 crore. On a sequential basis, provisions fell 5.3%. The June quarter had seen HDFC Bank reporting a spike in provisions on account of higher general provisioning for loans to companies in certain stressed sectors and coverage for agricultural loans. In the September quarter, the bank made contingent provisions against a project loan which underwent flexible structuring under the 5:25 regulatory framework in February 2016. HDFC Bank has a 2.3% share in the loan.
The gross non-performing asset (NPA) ratio at the end of September stood at 1.26%, up two basis points (bps) from the end of June, while the net NPA ratio improved to 0.43% from 0.44% a quarter ago. Paresh Sukthankar, deputy managing director, said the bank had received observations from the Reserve Bank of India (RBI) in respect of the flexible structuring for the project loan account. “We have made our submissions in respect of those observations and have been answering queries and we are still in the process of this regulatory dialogue in terms of our correspondence and discussions with the regulator,” Sukthankar said, adding that the conduct of the account has been standard.
Total advances rose 22.3% y-o-y to Rs 6.04 lakh crore as of September 30. Sukthankar said loan growth during the quarter was broad-based. “This growth came equally from both retail and wholesale. The retail loan growth was 21.6%, while the wholesale loan growth was marginally higher at 23.6%. So essentially both of them are ahead of the industry benchmarks,” he observed. Savings account deposits grew 23.6% y-o-y to `1.98 lakh crore and current account deposits grew at the same rate to Rs 97,825 crore. Low-cost CASA (current account savings account) deposits account for 43% of all deposits at the bank. Term deposits saw an increase of 11.7% over the previous year to Rs 3.94 lakh crore.