HDFC Bank Q3 Results: Profit Meets Estimates On Higher Other Income

HDFC Bank Ltd.’s quarterly profit met estimates, aided by higher other income, even as its asset quality slightly worsened.

Net profit rose 32.8 percent year-on-year to Rs 7,416 crore in the quarter ended December, India’s most valuable bank said in an exchange filing. That compares with the Rs 7,060-crore consensus estimate of analysts tracked by Bloomberg.

Other income rose 36 percent over the year-ago period to Rs 6,670 crore as the bank reported higher recoveries and dividend of Rs 940 crore. The recoveries were boosted by a Rs 200 crore one-off owing to the resolution of an insolvency case.

The lender’s net interest income, or core income, rose 12.6 percent to Rs 14,172.9 crore, led by growth in advances, compared with the Rs 14,184-crore estimate. That, however, was slowest pace in at least seven quarters. The company’s net interest margin remained stable at 4.2 percent over the preceding quarter.

“HDFC Bank’s numbers are largely in line on operational basis, but some niggles on asset quality side are visible, which we believe may be partly ascribed to some seasonality element,” said Lalitabh Shrivastawa, deputy vice president at Sharekhan. “We expect asset quality to revert to mean in a few quarters and believe HDFC Bank’s strong balance sheet and benefits of granular assets are significant long-term positives in its favour.”

HDFC Bank’s asset quality slightly worsened during the quarter. Gross non-performing assets ratio rose to 1.42 percent from 1.38 percent in the preceding quarter. Net NPA stood at 0.48 percent against 0.42 percent in the quarter ended September. Its provisions rose 37.6 percent year-on-year to Rs 3,043.6 crore.

HDFC Bank Q3 Results 2019-20: Other Highlights

• CASA deposits grew 21.5 percent year-on-year to Rs 4.2 lakh crore.
• CASA ratio stands at 39.5 percent of total deposits.
• Capital adequacy ratio stood at 18.5 percent.
• Deposits grew 25 percent year-on-year to Rs 10.7 lakh crore.
• Advances rose 20 percent year-on-year to 9.36 lakh crore.
• The earnings of HDB Financial services grew 16.5 percent year-on-year to Rs 343.1 crore.

HDB Financial

HDFC Bank also announced the results of its subsidiary HDB Financial services Ltd. for the quarter ended December. The non-bank lender reported a 16.5 percent year-on-year rise in its profit at Rs 343.1 crore.

Its assets under management grew 15.2 percent over the last year to Rs 59,178 crore. Its gross NPA ratio fell to 3 percent from 3.4 percent from the quarter ended September.

Shares of HDFC Bank have gained 7.41 percent in the three months to December compared with a 9 percent rise in the benchmark Nifty Bank Index during the period.

On Friday, HDFC Bank shares fell 0.80 percent to Rs 1,277.40 apiece on the NSE while the benchmark Nifty 50 shed 0.03 percent to end the day at 12,352.35 points.