Strong non-core income growth pushes revenues.
Despite low growth in interest income, the country’s second-largest private lender, HDFC Bank, registered a 30 per cent increase in net profit to Rs 687.46 crore for the quarter ended September 30, 2009, as against Rs 528 crore in the same quarter of the previous year.
The growth was aided by a 56.6 per cent year-on-year growth in non-core income, which rose to Rs 1,007.4 crore.
| FAVOURABLE QUARTER | ||||
| Quarter ended (Rs crore) | HDFC Bank | IndusInd Bank | ||
| 9-Sep | % chg* | 9-Sep | % chg* | |
| Interest earned | 3,991.89 | 0.02 | 655.03 | 19.12 |
| Total income | 4,999.29 | 7.88 | 787.38 | 23.25 |
| Interest expended | 2,036.13 | -4.17 | 446.48 | 0.42 |
| Net interest income | 1,955.76 | 4.79 | 208.55 | 98.16 |
| Net profit | 687.46 | 30.21 | 77.82 | 131.19 |
| * over Sept 2008 | ||||
But net interest income grew a sluggish 4.8 per cent to Rs 1,956 crore from Rs 1,866 crore in the year-ago period.
However, analysts said the core income performance of the bank was satisfactory when seen against the backdrop of a subdued credit environment in the industry.
In fact, after its loan book shrank in October-March of the previous financial year, the bank grew its loan book by 15 per cent in the half of the year up to September 30.
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“This is much higher than the industry as a whole, which grew around 3.7 per cent,” said Paresh Sukthankar, executive director, HDFC Bank.
In non-interest revenue, the bank’s income from fees and commissions was Rs 692.4 crore, up 17.9 per cent over the quarter ended September 30, 2008. Trading gains, at Rs 162.9 crore, were substantially higher than the year-ago quarter but 36 per cent lower than in the June quarter due to hardening of bond yields in September.
On the liabilities side, the performance exceeded analyst expectations. Low-cost deposits — current account-savings account (CASA) deposits — rose to over 47 per cent of the total deposits during the quarter as against 44 per cent on September 30, 2008, and 45 per cent at the end of the June quarter.
“There has been a bounce-back on the CASA front and the CASA ratio is back in the region of 50 per cent. And despite opening about 90 branches, the bank has managed to keep a lid on operating expenses,” said Vaibhav Agrawal, vice-president of banking research at Angel Broking.
The bank’s quality of assets also improved with gross non-performing assets as a proportion of advances falling to 1.8 per cent from 2.1 per cent at the end of the June quarter.
The bank’s capital adequacy ratio (CAR) on September 30 was 15.7 per cent, with Tier-I CAR at 10.9 per cent. However, the bank's CAR is expected to cross the 17 per cent mark before the end of the year, when Rs 4,000 crore of warrants issued to its promoter, HDFC, are converted into equity shares.
The bank’s stock closed flat at Rs 1,702.55 over the previous close of Rs 1,700.40 on the Bombay Stock Exchange.