HDFC Bank today reported net profit of Rs 1,114.7 crore for the quarter ended March 31, a rise of 33.2 per cent compared with the net profit of Rs 836.62 crore in the year-ago period. The rise in profit was fueled by accelerated growth in non-interest income. Stable margins, growth in interest income and lower provisions also contributed to the bank's earnings.
Analysts said the earnings were broadly in line with market expectations.
HDFC Bank’s board has recommended a dividend of Rs 16.50 per equity share of Rs 10 each (165 per cent). The bank had paid a dividend of Rs 12 per share for the year ended March 31, 2010.
Net interest income (the difference between interest income and expended interest) for the quarter stood at Rs 2,839.5 crore, up 20.8 per cent from a year earlier. “Our net interest income has grown on the back of 27 per cent growth in advances and a core net interest margin of 4.2 per cent,” said Executive Director Paresh Sukthankar. For the year ended March 31, 2011, non-interest income, or other income, rose to Rs 1,255.8 crore, on account of fees and commissions, which rose 23.2 per cent to Rs 1,000.6 crore.
Non-interest income during the quarter rose to Rs 245.4 crore, helped by foreign exchange and derivative transactions. Gains from bond trading stood at Rs 8.6 crore, compared with a loss of Rs 47.3 crore in the corresponding period last year.
For the year ended March 31, 2011, the bank reported net profit of Rs 3,926.4 crore, a rise of 33.2 per cent over the previous year, and net interest income of Rs 10,543 crore, a 25.7 per cent rise.
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Though operating expenses in the fourth quarter rose 24.3 per cent to Rs 1,998.4 crore, the bank was able to maintain its cost to income ratio at 48.8 per cent, compared with 48.7 per cent in the year-ago period.
The bank said it expected its net interest margin to remain in the range of 3.9-4.3 per cent in the coming quarters, despite the rising cost of funds. “Historically, we have been able to keep our margin in this range. While we don't give guidance on our margin, I don't see it moving out of this range," Sukthankar said. The bank's yields on advances stood at 10.5 per cent during the quarter.
As on March 31, 2011, HDFC Bank recorded net advances of Rs 159,983 crore, of which nearly 50 per cent were given to retail borrowers. Total deposits stood at Rs 208,586 crore, up 24.6 per cent over the previous year. The share of current account savings account (CASA) deposits remained high — at 51 per cent of total deposits.
"We expected that as fixed deposit rates have gone up, there would be some cannibalisation of CASA deposits. We are delighted to have our CASA ratio at this level. Going forward, I think it will remain somewhere close to this level,” Sukthankar said.
HDFC Bank's credit deposit ratio was 76 per cent and in the current financial year, the bank aims to increase its loans to a few percentage points higher than the industry average, Sukthankar said.
The bank's asset quality improved, with gross non-performing asset ratio declining by 30 basis points to 1.1 per cent and net bad loan ratio declining by 10 basis points to 0.2 per cent as on March 31. The provision coverage ratio of the bank stood at 82.5 per cent, higher than Reserve Bank of India's mandate of 70 per cent.
However, the bank saw a marginal rise in restructured loans, owing to the proposed debt recast of its microfinance clients. Total restructured assets, including applications received and under process, stood at 0.4 per cent of gross advances as on March 31, of which 0.1 per cent were restructured loans classified as non-performing assets. “There have been no non-performing assets in our microfinance loan portfolio,” Sukthankar said.
HDFC Bank added 261 branches and 1,239 automated teller machines (ATMs) during the year, and accounted for a network of 1,986 branches and 5,471 ATMs as on March 31.