The country’s largest private lender HDFC Bank’s profit before tax (PBT) rose by 15.6 per cent to Rs 9,901.85 crore for the quarter ended December 2019 (Q3FY20) on robust growth in net interest income, and fees and commissions. It had posted a PBT of Rs 8,566.89 crore in quarter ended December 2018 (Q3FY19).
The bank’s net profit in Q3FY20 rose by 32.8 per cent to Rs 7,416.5 crore, compared to Rs 5,585.85 crore in the corresponding period of the previous year. Its net interest income (NII), which is interest earned less interest expended, in the quarter rose by 12.7 per cent to Rs 14,172.9 crore from Rs 12,576.8 crore a year ago. The net interest margin (NIM) for the quarter remained stable at 4.2 per cent, the bank said.
Non-interest revenue (other income) grew by 32 per cent to Rs 6,669.3 crore for the quarter, as against Rs 4,921.0 crore in Q3FY19. The main component of other income — fees and commissions — expanded by 24.1 per cent to Rs 4,526.8 crore for the quarter.
The bank said provisions, including those for bad loans and contingencies, grew a whopping 37.6 per cent to Rs 3,043.6 crore in Q3FY20, from Rs 2,211.5 crore in the corresponding period a year ago.
The increase in specific loan loss provisions jumped by 66.2 per cent to Rs 2,883.6 crore in the quarter from Rs 1,734.6 crore the previous year.
The specific loan loss provisions in the current quarter include one-offs of approximately Rs 700 crore, primarily relating to some corporate accounts.
The general and other provisions declined to Rs 159.9 crore in Q3FY20 from Rs 476.9 crore in the year-ago period.
The asset quality showed some pressure as gross Non-performing assets (NPAs) rose year-on-year basis and sequentially. GNPAs moved up at 1.42 per cent in December 2019, from 1.38 per cent in December 2018. The gross NPAs stood at 1.38 per cent in September 2019.
Bank executives, in a conference call, said the asset quality of unsecured loans is holding well. However, the concern is over stress in the commercial vehicles and equipment segment. This is a function of the economic climate as freight rates and volumes have come down.
Referring to business performance, the bank said its advances rose by 20 per cent to Rs 9.36 trillion. Domestic retail loans grew by 14.1 per cent and domestic wholesale loan book expanded at a much faster pace of 29.3 per cent. The domestic loan mix showed retail share of 52 per cent, while that of wholesale was 48 per cent.
HDFC Bank’s deposits grew by 25.2 per cent to Rs 10.67 trillion at end of December 2019.
The share of low cost – current account and savings deposits (CASA) – in total deposits stood at 39.5 per cent as on December 31, 2019.
The bank’s total Capital Adequacy Ratio (CAR) as per Basel III guidelines was 18.5 per cent as on December 31, 2019 (17.3 per cent as on December 31, 2018). Common Equity Tier 1 Capital ratio (CET-1) was at 16.2 per cent as of December 31, 2019.