HDFC Bank results for quarter ended Dec 31, 2006

The Board of Directors of HDFC Bank Limited approved the Bank's accounts for the quarter and nine months ended December 31, 2006 at its meeting held on Thursday, January 11, 2007. The accounts have been subjected to a limited review by the Bank's statutory auditors.

FINANCIAL RESULTS

Quarter ended December 31, 2006: For the quarter ended December 31, 2006, the Bank earned total income of Rs.2,132.6 crores as against Rs.1,475.9 crores in the corresponding quarter ended December 31, 2005. Net revenues (net interest income plus other income) for the quarter ended December 31, 2006 were Rs.1,301.9 crores, an increase of 34.7% over Rs.966.7 crores for the corresponding quarter of the previous year. Interest earned (net of loan origination costs) increased by 49.1% from Rs.1,179.8 crores for the quarter ended December 31, 2005, to Rs.1,759.3 crores for the quarter ended December 31, 2006. Net interest income (interest earned less interest expended) for the quarter ended December 31, 2006 increased by 38.5% to Rs.928.6 crores driven by average asset growth of 31.6% and improvement in net interest margin to just over 4%.

Other income (non-interest revenue) for the quarter ended December 31, 2006 increased by 26.1% to Rs.373.3 crores, from Rs.296.1 crores for the corresponding quarter of the previous year. Its principal component was fees and commissions contributing Rs.331.4 crores for the quarter ended December 31, 2006, as against Rs.275.4 crores for the corresponding quarter ended December 31, 2005.

The other two components of other income were foreign exchange/derivatives revenues of Rs.63.0 crores and profit/(loss) on revaluation/sale of investments of Rs.(21.1) crores as against Rs.20.1 crores and Rs.(0.6) crores respectively, for the quarter ended December 31, 2005. Operating (non-interest) expenses for the quarter increased by Rs.155.9 crores to Rs.605.0 crores and were 46.5% of net revenues. Provisions and contingencies for the quarter were Rs.401.3 crores (against Rs.293.2 crores for the corresponding quarter ended December 31, 2005), principally comprising of specific provision for non performing assets and general provision for standard assets of Rs.192.9 crores and amortization of premia (for investments in the Held to Maturity category) of Rs.60.4 crores. After providing Rs.134.9 crores for taxation, the Bank earned a Net Profit of Rs.295.6 crores, an increase of 31.7% over the quarter ended December 31, 2005.

Total balance sheet size increased by 32.5% from Rs.67,623 crores as of December 31, 2005 to Rs.89,608 crores as of December 31, 2006. Total deposits were Rs.66,749 crores, an increase of 30.4% from December 31, 2005.

With savings account deposits of Rs.19,238 crores and current account deposits at Rs.17,433 crores, the CASA mix was healthy at around 54.9% of total deposits as at December 31, 2006, as against 53.1% as at December 31, 2005.

Net advances as at December 31, 2006 were Rs.48,201 crores, an increase of 32.8% over December 31, 2005, with gross retail loans now forming 52% of gross advances. The Bank's customer assets (including advances, corporate debentures, investments in securitised paper, etc.) net of loans securitized and participated out increased to Rs.53,898 crores as of December 31, 2006, from Rs.42,538 crores as of December 31, 2005.

Nine months ended December 31, 2006: For the nine months ended December 31, 2006, the Bank earned total income of Rs.6,021.1 crores as against Rs.3,916.7 crores in the corresponding period of the previous year. Net revenues (net interest income plus other income) for the nine months ended December 31, 2006 were Rs.3,713.7 crores, up by 41.4% over Rs.2,626.3 crores for the nine months ended December 31, 2005. Net Profit for the nine months ended December 31, 2006 was Rs.797.9 crores, up by 31.3%, over the corresponding nine months ended December 31, 2005.

BUSINESS UPDATE: As of December 31, 2006, the Bank's distribution network had expanded to 583 branches and 1,471 ATMs in 263 cities from 535 branches and 1,326 ATMs in 228 cities as of December 31, 2005. As of December, 2006 the number of debit cards issued by the bank touched 4 million while credit cards issued crossed the 2.75 million mark.

Portfolio quality as of December 31, 2006 remained healthy with net non-performing assets at 0.4% of total customer assets. Capital Adequacy Ratio (CAR) was 12.8% against the regulatory minimum of 9%. Tier I CAR was at 8.4%. During the quarter ended December 31, 2006, the Bank has raised Rs.479 crores of subordinated debt qualifying as Upper Tier II capital (including US$ 100 million in foreign currency).