HDFC Bank rose 3.49% to Rs 942.20 after the bank reported strong Q4 results on Saturday (18 April 2020).
HDFC Bank's net profit rose 17.72% to Rs 6,927.69 crore on 15.10% increase in total income to Rs 35,917.63 crore in Q4 March 2020 over Q4 March 2019. Profit before tax (PBT) for Q4 March 2020 was at Rs 9,174.33 crore, up by 2.5% from Rs 8954.38 crore in the corresponding period of the previous year.Net interest income (interest earned less interest expended) for the quarter ended on 31 March 2020 grew to Rs 15,204.1 crore from Rs 13,089.5 crore for the quarter ended on 31 March 2019, driven by growth in advances of 21.3%, and a growth in deposits of 24.3%. The net interest margin for the quarter was at 4.3%, the bank said.
During the quarter, there was a considerable slowdown in economic activities following the outbreak of COVID-19. Furthermore, with the government initiating lockdown in the latter half of March, and the bank's strict adherence to social distancing, not only did the bank witnessed an impact on its business volumes - in terms of loan originations, distribution of third party products, and payments product activities, but the bank also could not optimize its collection efforts, and as a result of which fees/other income were lower by Rs 450 crore, the private lender said in a statement.
Operating expenses for the quarter ended on 31 March 2020 were Rs 8,277.8 crore, an increase of 16.3% over Rs 7,117.1 crore during the corresponding quarter of the previous year. The cost-to-income ratio for the quarter was at 39% as against 39.6% for the corresponding quarter ended on 31 March 2019.
Pre-provision operating profit (PPOP) at Rs 12,958.8 crore grew by 19.5% over the corresponding quarter of the previous year.
Provisions and contingencies jumped 100.32% to Rs 3,784.49 crore in Q4 March 2020 from Rs 1,889.22 crore in Q4 March 2019. Total provisions for the current quarter included credit reserves relating to COVID-19 in the form of contingent provisions of approximately Rs 1550 crore. The core credit cost ratio was 0.77%, as compared to 0.92% in the quarter ending 31 December 2019 and 0.69% in Q4 March 2019.
Gross non-performing assets (NPAs) stood at Rs 12649.97 crore as on 31 March 2020 as against Rs 13427.25 crore as on 31 December 2019 and Rs 11224.16 crore as on 31 March 2019.
The ratio of gross NPAs to gross advances stood at 1.26% as on 31 March 2020 as against 1.42% as on 31 December 2019 and 1.36% as on 31 March 2019. The ratio of net NPAs to net advances stood at 0.36% as on 31 March 2020 as against 0.48% as on 31 December 2019 and 0.39% as on 31 March 2019.
The private lender's net profit rose 24.57% to Rs 26,257.32 crore on 18.42% rise in total income to Rs 138,073.47 crore in the year ended March 2020 over the year ended March 2019.
The net interest margin for the year ended on 31 March 2020 was 4.3%. The cost to income ratio for the year ended on 31 March 2020 was at 38.6%, as against 39.7% for the year ended March 31, 2019.
The bank's PBT for the year ended on 31 March 2020 was Rs 36,607.16 crore, up 13.7% from Rs 32,199.64 crore for the year ended on 31 March 2019.
Total deposits as of 31 March 2020 were 11,47,502 crore, an increase of 24.3% over 31 March 2019. CASA deposits grew by 23.9% with savings account deposits at 310,377 crore and current account deposits at 174,248 crore. Time deposits were at 662,877 crore, an increase of 24.6% over the previous year, resulting in CASA deposits comprising 42.2% of total deposits as of 31 March 2020. The bank's continued focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 132%, well above the regulatory requirement.
Total advances as of 31 March 2020 were 993,703 crore, an increase of 21.3% over 31 March 2019. Domestic advances grew by 21.4% over 31 March 2019. As per regulatory [Basel 2] segment classification, domestic retail loans grew by 14.6% and domestic wholesale loans grew by 29.3%. The domestic loan mix as per Basel 2 classification between retail:wholesale was 51:49. Overseas advances constituted 3% of total advances.
On the asset quality front, HDFC Bank said that in accordance with the RBI guidelines relating to COVID-19 Regulatory Package dated 27 March 2020 and 17 April 2020, the Bank would be granting a moratorium of three months on the payment of all installments and/or interest, as applicable, falling due between 1 March 2020 and 31 May 2020 to all eligible borrowers classified as Standard, even if overdue, as on 29 February 2020.
For all such accounts where the moratorium is granted, the asset classification shall remain standstill during the moratorium period (i.e. the number of days past-due shall exclude the moratorium period for the purposes of asset classification under the IRACP norms). The Bank holds provisions as on 31 March 2020 against the potential impact of COVID-19 based on the information available at this point in time and the same are in excess of the RBI prescribed norms. As a result, GNPA and NNPA ratios were lower by 10 bps and 6 bps respectively.
The bank's total capital adequacy ratio (CAR) as per Basel III guidelines was at 18.5% as on 31 March 2020 (17.1% as on March 31, 2019) as against a regulatory requirement of 11.075% which includes capital conservation buffer of 1.875%, and an additional requirement of 0.20% on account of the bank being identified as a domestic systemically important bank (D-SIB).
In a separate announcement on Saturday, HDFC Bank informed that pursuant to the recommendation of the nomination and remuneration committee (NRC), the board of directors of the bank has finalized the names of three candidates for the position of MD & CEO of the bank.
As per the extant RBI norms, the Bank will be submitting its application to RBI with the names of the candidates in the order of preference, seeking approval for the appointment of the new MD & CEO, who shall succeed Aditya Puri whose term is due to expire on 26 October 2020.
HDFC Bank is one of India's leading private banks. As of 31 March 2020, the bank's distribution network was at 5,416 banking outlets and 14,901 ATMs / Cash Deposit & Withdrawal Machines (CDM5) across 2,803 cities / towns as against 5,103 banking outlets and 13,489 ATMs towns as of 31 March 2019. Of the total banking outlets, rural areas.
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