HDFC Bank Q3 net rises 20% to Rs4,642.6 crore

HDFC Bank, the country's most valued bank, has reported a 20-per cent year-on-year increase in its fiscal third quarter net profit to Rs4,642.6 crore on the back of an 18 per cent rise in income.

HDFC Bank's profit for the quarter would have been higher but for an 89-per cent jump in provisioning. The higher provisioning, however, was partly offset by a 24-per cent increase in interest margin, or the difference between interest earned and interest expended, to Rs10,314.3 crore. The bank' net interest margin stood at 4.3 per cent. Non-interest income grew 23 per cent to Rs3,869.17 crore.

The bank's provisioning soared to Rs1,351.44 crore following the bank's move to set aside additional amounts against three doubtful corporate accounts as per RBI's and the bank's own assessment.

Paresh Sukthankar, deputy managing director of the bank, said HDFC Bank had already made contingent provisioning for one of the accounts during the last quarter, even before RBI's classification of the accounts as a non-performing asset (NPA).

''Of the balance amount, some had already been declared NPL (non-performing loan) in the June quarter and the September quarter. Since we now have finality we have given the divergence of the total NPLs,'' Sukthankar said. The total divergence in provisioning for the bank, difference between its assessment and that of RBI's for three corporate accounts, in FY17 stood at Rs793.39 crore. The divergence with respect to gross NPAs stood at Rs2,051.76 crore. However, following an upgrade in classification of one of these accounts to ''standard'' in December last year, the divergence has come down to Rs294.18 crore on 31 December 2017. The bank's gross NPA ratio as on 31 December stood at 1.29 per cent, 3 basis points (bps) higher than on 30 September. The net NPA ratio rose 1 basis point sequentially to 0.44 per cent. The core net interest margin in Q3 remained unchanged at 4.3 per cent from the preceding quarter ended in September.

The growth in net profit was driven by a 28.7 per cent increase in retail loans and 26.4 per cent rise in wholesale loans. Total advances as of 31 December 2017 stood at Rs6,31,215 crore - an increase of 27.5 per cent over 31 December 2016, and 4.4 per cent increase over 30 September 2017. Total deposits as of 31 December 2017 stood at Rs6,99,026 crore, up 10.1 per cent over 31 December 2016.

The bank's CASA deposits rose 6.7 per cent to Rs3,07,000 crore, while total deposits rose 10 per cent to Rs6,99,000 crore. CASA deposits accounted for 43.9 per cent of total deposits as of 31 December 2017.

Sukthankar said that after a long time, loans were growing at a much faster pace than deposits. "If current liquidity conditions persist, there could be upward pressure on deposit and lending rate."

The bank's network expanded to 4,734 branches (4,555 branches as of 31 December 2016) and 12,333 ATMs (12,087) across 2,672 cities. Of the total branches, 52 per cent are in semi-urban and rural areas.