HDFC Bank on Thursday said its net profit for the quarter ended December 31, rose 31 per cent to Rs 1,429.7 crore, compared with Rs 1,087.8 crore in the year-ago period. Higher fee income, lower provisions due to the improving asset quality and growth in interest income from advances aided earnings.
Net interest income, or the difference between interest income and interest expenditure, stood at Rs 3,116 crore, a 12 per cent rise over the year-ago period. The sequential net interest margin was steady at 4.1 per cent, but fell by 10 basis points compared to a year ago, due to the high cost of funds. Yields on advances and cost of deposits rose by 10 basis points sequentially. The cost of funds rose by 130 basis points year-on-year, while yields on advances rose by 120 basis points.
“We are fairly comfortable with our net interest margin. We have been able to maintain it in the traditional range of 3.9-4.2 per cent. We expect our margin to remain in this range in the near term,” said executive director Paresh Sukthankar.
The bank’s other income grew 25.9 per cent year-on-year, driven by higher income from fees and commissions. Fee income rose 19.6 per cent to Rs 1,127.6 crore. Sukthankar said the lender earned fee income from a wide range of products and services.
| STELLAR SHOW | ||
| (in Rs crore) | 11-Dec | % Chg* |
| Interest earned | 7,202.64 | 37.7 |
| Other income | 1,420 | 26 |
| Total income | 8,623 | 36 |
| Interest expended | 4,087 | 67 |
| NII | 3,115.99 | 12 |
| Net profit | 1,429.66 | 31.4 |
| *Y-o-Y change Data compiled by BS Research Bureau Source : Capitaline | ||
Operating expenses rose 17.8 per cent to Rs 2,158 crore, compared to the same period a year ago, as the bank expanded its business. The core cost to income ratio stood at 46.7 per cent, compared with 46.5 per cent a year ago.
The bank made provisions of Rs 329.2 crore in the quarter, 29 per cent lower than that in the year-ago period, as its asset quality remained healthy. The gross non-performing asset ratio rose by 10 basis points to 1 per cent, while the net bad loan ratio was steady at 0.2 per cent as of December 31. At 80.3 per cent, the provision coverage ratio, excluding write-offs, was higher than the regulatory requirement.
Total restructured assets stood at 0.4 per cent of the bank’s gross advances. Restructured advances classified as standard assets were 0.1 per cent of gross loans.
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Sukthankar said the bank was comfortable with the quality of loans and had little exposure to stressed sectors.
The bank’s gross advances rose 21.9 per cent year-on-year to Rs 195,788 crore, driven by higher disbursement of retail loans, which now account for 51.3 per cent of the bank’s advances, compared with 48 per cent a year earlier.
Sukthankar said the bank had decided to “cut back a little” on short-term corporate loans to protect its net interest margin. Retail loans stood at Rs 100,347 crore as of December 31, of which a quarter was auto loans.
The bank expects its credit expansion to outpace industry growth by a “few percentage points” and sees system credit growth at around 16 per cent this financial year.
The credit deposit ratio stood at about 84 per cent. Total deposits increased 21 per cent to Rs 232,508 crore, driven by 15.2 per cent growth in savings deposits. The share of core current account and savings account deposits, after adjusting for one-off current account balance of Rs 4,000 crore, stood at 47.7 per cent of total deposits.
The bank’s capital adequacy ratio was 16.3 per cent.