HDFC Bank Third Quarter Results: Net Profit Up 18%
Private sector lender HDFC Bank Ltd saw its net profit rise 18% a year ago in the quarter ended in December, as net interest income improved and provisions remained modest. The results for the quarter ended in December are the first under the leadership of new Managing Director Sashidhar Jagdishan.
HDFC Bank’s net profit during the October-December period amounted to Rs 8,758.3 crore, compared to a profit of Rs 7,416 crore a year ago. Analysts polled by Bloomberg estimated that HDFC Bank’s third-quarter net profit was Rs 7,641 crore.
Net interest income, or basic income of the bank, increased 15% year-on-year to Rs 16,317.6 crore. Analysts had projected the basic income at Rs 15,400 crore. The net interest margin for the quarter was 4.2%. Other income in the quarter increased 31.3% to Rs 7,443.2 crore.
The quality of the bank’s assets was stable in the third quarter, with a ratio of gross non-performing assets at 0.81% against 1.08% at September 30. The net EPS ratio improved to 0.09%, down 8 basis points sequentially.
The Supreme Court had banned banks and other financial institutions from classifying an account as NPA after August 31, until further notice. The pro forma postcode number includes accounts which should have been postcode but which were not classified as such.
Provisions for the quarter stood at Rs 3,414 crore, compared to Rs 3,703.5 crore in the July-September period and Rs 3,043 crore in the same period last year. Analysts had projected the figure at Rs 4,589 crore.
Advances and deposits
Advances during the quarter increased 15.6% year-on-year to Rs 10.82 lakh crore. Growth on a sequential basis is 4%.
Domestic retail lending increased 5.2% while domestic wholesale lending increased 25%.
Deposits for the same period increased 19% from last year to Rs 12.7 lakh crore. Deposits increased by 3% compared to the July-September period. The CASA ratio, which corresponds to the share of current accounts and low-cost savings accounts, of the bank stood at 43% against 41.6% in the previous quarter and 39.5% in the same period. last year.
The quality of HDB’s financial assets deteriorates
While the bank maintained the quality of its assets, the non-bank subsidiary HDB Financial saw the quality of its assets deteriorate and recorded an after-tax loss due to an increase in provisions.
The unit’s after-tax loss amounted to Rs 44.3 crore for the quarter ended in December, compared to a profit of Rs 216.7 crore last year.
The pro forma gross NPA ratio for HDB Financial rose to 5.9% in December 2020, compared to 5.1% in September 2020 and 2.9% in December 2019. Provisions and contingencies at Rs 818.8 crore.
The NBFC continued to slow the expansion of its balance sheet. The total loan portfolio was Rs 57,710 crore as of December 31, 2020 against Rs 56,748 crore as of December 31, 2019.