HDFC Bank Q1 net up 20% at Rs3,894 cr despite higher provisioning

HDFC Bank, India's second-biggest lender, has reported a 20 per cent year-on-year increase in its fiscal first quarter net profit, at Rs3,894 crore despite slower loan growth and higher bad loan provisioning.

Net profit of the private sector lender stood at Rs3,239 crore for the year-ago quarter as net interest income rose 20.4 per cent to Rs9,371 crore, with a core net interest margin of 4.4 per cent.

Total income earned during the April-June 2017-18 quarter rose 14.81 per cent to Rs22,185.3 crore from Rs19,322.63 crore in the corresponding quarter of the previous fiscal.

HDFC Bank's provisioning, including for bad loans, surged nearly 80 per cent to Rs1,559 crore in the first quarter ended 30 June 2017, while provisioning for specific loan losses rose about 61.4 per cent to Rs1,343 crore.

Provisioning, or the money set aside for anticipated future losses, climbed 23.5 percent to Rs1,558.76 crore in the quarter from Rs1,261.80 crore in last quarter.

Gross non-performing loans as a percentage of total loans hit 1.24 per cent at end-June, from 1.05 per cent at end-March.

HDFC Bank, which has the lowest bad loans among India's leading banks, said 60 per cent of the total increase in gross non-performing assets was related to the agricultural sector.

HDFC said its asset quality worsened primarily due to increase in non-performing assets. Gross non-performing assets (NPAs) rose to 23.1 per cent to Rs7,243 crore on a quarter-on-quarter basis from Rs5,885.66 crore in the same quarter last year.

"Recoveries from agricultural advances were impacted during the quarter by borrower expectations of farm loan waivers arising out of policy announcement in certain states," HDFC Bank said in exchange filing.

HDFC Bank shares were trading higher at Rs1,731.00 on BSE, up as much as 1.6 per cent at noon, after the announcement of the results.