 "HDFC's net rises in single digit after 21 quarters")
The profit was largely in line with Bloomberg estimates of Rs 1,362 crore. However, the net profit growth is the lowest after the March 2009 quarter, when profits declined by 4.5 per cent. Since then, the net profit growth has always been in double-digits. It is after 21 quarters that the profit growth has slipped into single digits.
The slower growth in this quarter can be attributed to increase in provisioning and tax, say analysts. Provisions and contingencies jumped 133 per cent year-on-year to Rs 35 crore from Rs 15 crore in the same quarter last year. However, sequentially, it remained unchanged.
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Tax expenses rose this quarter by 19 per cent to Rs 541 crore as compared to Rs 455 crore in the year-ago period.
The non-banking finance company has provided Rs 83.3 crore towards deferred tax liability in the quarter on special reserves, as compared to Rs 75 crore in the June quarter. This item was introduced from the latter quarter.
Keki Mistry, vice-chairman and chief executive officer, said: "The net profit growth appears to be lower because in the past year, we did not have this deferred tax liability. Apart from this, the dividend income in this quarter has been Rs 100 crore, as compared to Rs 170 crore in the September quarter last year."
He also added provisioning had risen, although non-performing loans have come down as the asset base has increased. Gross non-performing loans reduced to 0.69 per cent of the loan portfolio at the end of the quarter as compared to 0.79 per cent in the same period last year.
Income from operations rose 11.4 per cent to Rs 6,533 crore. The loan book was at Rs 2.12 lakh crore as on September-end, up 15 per cent compared to Rs 1.85 lakh crore in the year-ago period.
"Of the total loan book, individual loans comprise 71 per cent. Further, 81 per cent of the incremental growth in the loan book during the period came from individual loans," said Mistry. He added that they'd begun to see a slight uptick even in loans from the non-individual segments.
"In the June quarter, the loan book mix (on the incremental growth) was 86 per cent individual and 14 per cent non-individual. The proportion of non-individual had increased in this quarter," he said.
The average size of loans has also picked up to Rs 23.1 lakh at the end of September as compared to Rs 22.7 lakh in the same period last year.
Vaibhav Agrawal, vice-president, research and banking, Angel Broking, says the results were in line with estimates and the growth in the loan book remained healthy. "The key positive was that loan growth was strong and reflects an increase in demand. Apart from this, even on the asset quality front it remained stable and the core income growth was also healthy."
The spread on loans over cost of borrowing was stable at 2.29 per cent, the same as in the June quarter. Net interest margin for the half-year was four per cent.
The capital adequacy ratio, without reducing the investment in HDFC Bank from tier-I capital, while treating it as a 100 per cent risk weight, was 17.9 per cent of the risk-weighted assets, of which tier-I capital was 15.7 per cent and tier-II was 2.2 per cent.
The stock rose 0.9 per cent on Wednesday to Rs 1,030.45 on the BSE.