HDFC Bank Q4 and FY06 results meet expectations
Our Banking Bureau
14 April 2005

HDFC Bank has once again turned in quarterly and annual results which have met market expectations. The bank is often referred to as 'the 30 per cent bank' for the regularity with which it reports quarterly profit growth of around 30 per cent.

For the full year 2005-06, HDFC Bank has reported a 30.83 per cent rise in net profits to Rs870.78 crore from Rs665.56 crore for the previous year.

Interest income, including investment income and interest in balances with RBI, for the full year increased 44.67 per cent to Rs4,475.34 crore from Rs3,093.49 crore. Income from treasury operations and other income were higher by 72.56 per cent at Rs1,123.98 crore from Rs651.34 crore.

Interest expenses for the full year increased 46.67 per cent to Rs1,929.5 crore from Rs1,315.56 crore for the previous year. Operating expenses, including staff costs, rose 55.8 per cent to Rs1,691.09 crore from Rs1,085.4 crore.

Operating margins for the year were at 35.34 per cent, marginally lower than 35.89 per cent for the previous year.

For the quarter ended March 2006, the bank's net profit increased by 30.06 per cent to Rs263.21 crore or Rs8.4 per equity share from Rs202.37 crore or Rs6.7 per equity share for the previous year quarter.

Interest income, including income from investments, for the quarter increased by 58.96 per cent from Rs867.21 crore to Rs1,378.5 crore. Income from treasury operations and other income increased by 38.21 per cent to Rs304.15 crore from Rs220.06 crore.

The pressure of rising deposit rates is evident from the 80.73 per cent rise in interest expenses to Rs639.09 crore from Rs353.63 crore. Other expenditure, including staff costs, increased 46.78 per cent to Rs482.32 crore from Rs328.6 crore.

Operating margins for the quarter dropped nearly 400 basis points from 37.25 per cent to 33.35 per cent. Provisions for the quarter increased 74.5 per cent to Rs181.6 crore from Rs107.07 crore.

HDFC has always focused on maintaining asset quality even at the cost of rapid growth. The bank's asset quality remained excellent during the quarter with NPA's of just 1.2 per cent and net bad assets at 0.4 per cent of total assets.

Capital adequacy ratio as at the end of the March quarter stood at 11.4 per cent as compared to 12.2 per cent during the year ago period. The bank raised Rs788 crore during the quarter as tier II capital in the form of subordinated bonds.

The bank added 68 new branches during the quarter by including 17 new locations to its network. HDFC Bank said it would continue to expand in semi-urban and markets with lower penetration. At present, 54 per cent of the 535 branches are outside large cities.

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