Buoyed by a rise in fee-based income, the country’s second-largest lender HDFC Bank today reported a 33.91 rise in net profit to Rs 630.88 crore for the quarter-ended March 2009, despite a rise in bad debts.
But the fourth quarter and the annual results are not comparable due to Centurion Bank of Punjab’s merger with HDFC Bank, which became effective on May 23, 2008.
HDFC Bank’s net interest income rose 29 per cent to Rs 1,852 crore during the fourth quarter, while other income more than doubled to Rs 1,114.69 crore. This was bolstered by a 45.8 per cent increase in fees and commissions to Rs 714.80 crore.
Foreign exchange and derivatives-related revenues rose 152 per cent to Rs 152.8 crore, as against Rs 60.4 crore during the fourth quarter of 2007-08.
HDFC Bank Executive Director Paresh Sukhtankar said that the increase looked higher as, during the fourth quarter of 2007-08, there were some clients who had contested the derivatives-related claims.
| HDFC BANK | |||
| (Rs crore) | Quarter ended June | % chg | |
| 2007-08 | 2008-09 | ||
| Interest income | 2,956.18 | 4,250.83 | 43.79 |
| Other income | 549.34 | 1,114.69 | 102.91 |
| Total income | 3505.5 | 5385.5 | 53.6 |
| Operating profit | 1088.7 | 1570.5 | 44.3 |
| Non-tax provisions | 485.1 | 657.4 | 35.5 |
| Net profit | 471.1 | 630.9 | 33.9 |
| Gross NPAs | 907.0 | 1988.1 | 119.2 |
| % of gross advances | 1.3 | 2.0 | - |
| Net NPAs | 298.5 | 627.6 | 110.2 |
| % of net advances | 0.5 | 0.6 | - |
For the year-ended March 2009, the bank’s net profit rose 41.18 per cent to Rs 2,244.95 crore, as against Rs 1,590.18 crore during 2007-08.
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During the fourth quarter last year, the bank’s other income also rose because it booked a profit of Rs 243.60 crore through the revaluation and sale of investment, as against Rs 11.4 crore during the corresponding period last year. The bank took advantage of low yields during January to book the gains.
During the fourth quarter, the bank’s stock of gross non-performing assets (NPAs) shot up by 119 per cent to Rs 1,988 crore. The bank said that 42 per cent of these NPAs were on account of its merger with the Centurion Bank of Punjab.
Factoring that out, HDFC Bank’s NPA rose 27 per cent to Rs 1,153 crore.
Due to the larger stock of NPAs, the bank’s provisions went up by 35.51 per cent to Rs 657.41 crore and it managed to keep net NPAs as a proportion of net advances at 0.6 per cent at the end of March 2009, as against 0.5 per cent in the corresponding period last year.
“It is the cost (of the merger). But there were advantages in the form of 400 branches and client base,” said Sukhtankar.
Besides, he said, delinquencies in the system had also gone up due to deterioration in the economic environment and the bank had increased the coverage through higher provisions.
At the end of the fourth quarter of the last financial year, the NPA coverage ratio, based on specific provisions, was 68 per cent and, based on total provisions, was over 100 per cent.
“There is no particular segment where we are seeing an increase. Also, we do not have concentration issues since our exposure to sectors such as gems and jewellery and real estate are very limited,” Sukhtankar said.
The bank said its net interest margin was 4.2 per cent at the end of March 2009, as against 4.3 per cent at the end Of December, 2008.
The Casa (current account and savings bank account) base, which had dropped to around 40 per cent of deposits at the end of December, went up to 44 per cent as fixed deposit interest rates fell.