HDFC Bank Q3 Results: Net Profit Up 18% 
A customer exits an HDFC Bank Ltd. branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

HDFC Bank Q3 Results: Net Profit Up 18% 

Private sector lender HDFC Bank Ltd saw its net profit rise by 18% over a year ago in the December-ended quarter, as net interest income improved and provisions remained modest. Earnings for the December-ended quarter are the first under new chief executive officer Sashidhar Jagdishan.

HDFC Bank’s net profit in the October-December period stood at Rs 8,758.3 crore, as compared with a profit of Rs 7,416 crore a year ago. Analysts polled by Bloomberg had estimated that HDFC Bank’s third quarter net profit at Rs 7,641 crore.

Net interest income, or core income of the bank, rose 15% year-on-year to Rs 16,317.6 crore. Analysts had projected the core income at Rs 15,400 crore. The net interest margin for the quarter stood at 4.2%. Other income during the quarter rose 31.3% to Rs 7,443.2 crore.

The bank’s asset quality was steady in the third quarter, with gross non-performing asset ratio at 0.81% as compared with 1.08% as on September 30. The net NPA ratio improved to 0.09%, down 8 basis points on a sequential basis.

The pro forma gross NPA ratio, which precludes the impact from the Supreme Court’s interim stay on bad loan classification, stood at 1.38% at the end of December 2020, compared to 1.37% in the previous quarter. The pro forma net NPA ratio stood at 0.40% compared to 0.35% last quarter.

The Supreme Court had barred banks and other financial institutions from classifying an account as NPA after August 31, until further orders. The pro-forma NPA number includes accounts which should have been NPA but have not been classified as such.

Provisions for the quarter stood at Rs 3,414 crore as compared to Rs 3,703.5 crore in the July-September period and Rs 3,043 crore during the same period last year. Analysts had projected the figure at Rs 4,589 crore.

Advances And Deposits

Advances during the quarter rose 15.6% year-on-year to Rs 10.82 lakh crore. The growth on a sequential basis stood at 4%.

Domestic retail loans grew 5.2% while domestic wholesale loans grew 25%.

Deposits for the same period rose 19% from last year to Rs 12.7 lakh crore.Deposits rose 3% as compared to the July-September period. The CASA ratio, which is the share of low cost current account and savings account deposits, for the bank stood at 43% as compared to 41.6% in the previous quarter and 39.5% during the same period last year.

HDB Financial Asset Quality Deteriorates

While the bank maintained its asset quality, non-bank subsidiary HDB Financial saw asset quality deteriorate and reported a post-tax loss due to increased provisions.

Post-tax loss for the unit stood at Rs 44.3 crore for the December ended quarter compared to a profit of Rs 216.7 crore last year.

The pro forma gross NPA ratio for HDB Financial rose to 5.9% as of December 2020 compared to 5.1% as of September 2020 and 2.9% as of December 2019. Provisions and contingencies at Rs 818.8 crore.

The NBFC continued to go slow on expanding its balance sheet. The total loan book was Rs 57,710 crore as on December 31, 2020 as against Rs 56,748 crore as of December 31, 2019.

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