HDFC Bank fell 2.52% to Rs 1483.40 after the bank announced its first quarter earnings on Saturday (17 July 2021).
The private sector bank reported 16.08% rise in standalone net profit to Rs 7,729.64 crore on 6.73% increase in total income to Rs 36,771.47 crore in Q1 FY22 over Q1 FY21. Profit before tax (PBT) for the quarter ended 30 June 2021 at Rs 10,306.2 crore, grew 15.3% over corresponding quarter of the previous year. Tax expense increase 13.05% year-on-year (YoY) to Rs 2,576.55 crore during the quarter.
Net interest income for the quarter ended 30 June 2021 grew to Rs 17,009 crore from Rs 15,665.40 crore for the quarter ended 30 June 2020, driven by advances growth of 14.4%, and a core net interest margin of 4.1%.
The bank's continued focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 126%, well above the regulatory requirement.
Operating expenses for Q1 FY22 were Rs 8,160.4 crore, an increase of 18.1% over Rs 6,911.5 crore in Q1 FY22. The cost-to-income ratio for the quarter was at 35%.
Pre-provision Operating Profit (PPOP) at Rs 15,137.0 crore grew by 18% over the corresponding quarter of the previous year.
Provisions and contingencies for the quarter ended 30 June 2021 rose by 24.14% to Rs 4,830.8 crore (consisting of specific loan loss provisions of Rs 4,219.7 crore and general and other provisions of Rs 611.1 crore) as against Rs 3,891.5 crore (consisting of specific loan loss provisions of Rs 2,739.8 crore and general and other provisions of Rs 1,151.7 crore) for the quarter ended 30 June 2020. Total provisions for the current quarter included contingent provisions of approximately Rs 600 crore.
During the quarter, the country was hit by a "second wave" of COVID-19, with a significant surge in cases following the discovery of mutant coronavirus strains. While there was an improvement towards the end, business activities remained curtailed for almost two thirds of the quarter. These disruptions led to a decrease in retail loan originations, sale of third-party products, card spends and efficiency in collection efforts. The lower business volumes, coupled with higher slippages, resulted in lower revenues, as well as an enhanced level of provisioning.
The total credit cost ratio was at 1.67%, as compared to 1.64% for the quarter ending 31 March 2021 and 1.54% for the quarter ending 30 June 2020.
Gross non-performing assets aggregated to Rs 5,485.80 crore as on 30 June 2021 as against Rs 4,554.82 crore as on 31 March 2021 and Rs 3,279.96 crore as on 30 June 2020.
Gross non-performing assets were at 1.47% of gross advances as on 30 June 2021 as against 1.32% as on 31 March 2021 and 1.36% as on 30 June 2020.
Net non-performing assets were at 0.48% of net advances as on 30 June 2021 as against 0.40% as on 31 March 2021 and 0.33% as on 30 June 2020.
The bank held floating provisions of Rs 1,451 crore and contingent provisions of Rs 6,596 crore as on 30 June 2021. Total provisions (comprising specific, floating, contingent and general provisions) were 146% of the gross non-performing loans as on 30 June 2021.
Total deposits as of 30 June 2021 were Rs 1,345,829 crore, an increase of 13.2% over 30 June 2020. CASA deposits grew by 28.1% with savings account deposits at Rs 426,132 crore and current account deposits at Rs 185,669 crore.
Total advances as of 30 June 2021 were Rs 1,147,652 crore, an increase of 14.4% over 30 June 2020. As per the bank's internal business classification, retail loans grew by 9.3%, commercial and rural banking loans grew by 25.1% and other wholesale loans grew by 10.2%. Overseas advances constituted 3% of total advances.
The bank's total Capital Adequacy Ratio (CAR) as per Basel III guidelines was at 19.1% as on 30 June 2021 (18.9% as on 30 June 2020) as against a regulatory requirement of 11.075%.
Amongst the bank's subsidiaries, HDFC Securities (HSL) recorded 94.9% rise in profit after tax to Rs 260.6 crore on a 67.3% rise in total income to Rs 457.8 crore in Q1 FY22 over Q1 FY21.
As on 30 June 2021, the bank held 96.3% stake in HSL. The retail broking firms had 215 branches across 147 cities / towns in the country.
HDB Financial Services (HDBFSL) reported 2.86% YoY increase in net income to Rs 1,655.80 crore in Q1 FY22. Pre-provision Operating Profit (PPOP), however, declined by 15.30% YoY to Rs 643.60 crore during the quarter. Provisions and contingencies for the quarter were at Rs 472.4 crore as against Rs 453.5 crore for the quarter ended 30 June 2020. Net profit declined by 43.88% to Rs 130.6 crore in Q1 FY22 from Rs 232.7 crore in Q1 FY21. As on 30 June 2021, gross NPA based on the approach used for NBFCs was 7.75% as against 2.86% on 30 June 2020 and 3.89% as on 31 March 2021.
HDBFSL's total loan book was Rs 57,390 crore as on 30 June 2021 as against Rs 56,613 crore as on 30 June 2020. Liquidity coverage ratio was healthy at 242%, well above the regulatory requirement.
HDBFSL is a non-deposit taking non-banking finance company (NBFC) offering wide range of loans and asset finance products to individuals, emerging businesses and micro enterprises. As on 30 June 2021, HDFC Bank held 95.1% stake in HDBFSL.
Separately, HDFC Bank informed that its board has approved issue of foreign currency denominated Perpetual Debt Instruments as Basel III compliant Additional Tier I capital (AT-1 Bonds) to foreign (global) investors outside India, on an unsecured basis, on a public or a private placement basis, along with a proposed listing of the AT1 Bonds and other related activities in the course of the financial year 2021- 22, subject to market conditions and applicable approvals.
HDFC Bank is one of India's leading private banks. As of 30 June 2021, the bank's distribution network was at 5,653 branches and 16,291 ATMs / cash deposit & withdrawal machines (CDMs) across 2,917 cities / towns.
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