HDFC Bank Q2 net up nearly 27% to Rs6,345 cr despite a 48% jump in provisioning

Private sector lender HDFC Bank on Saturday reported a net profit of Rs6,345 crore for fiscal second quarter ended 30 September 2019, a 26.7 per cent year-on-year increase compared to the similar quarter of the previous financial year.

The higher profit, however, was due to higher interest income and other income. HDFC Bank’s other income for the quarter ended 30 September 2019 grew 39.2 per cent to Rs5,588.7 crore over the corresponding quarter of the previous financial year.
At the same time, the bank witnessed a 48 per cent year-on-year jump in total provisioning against loans and other contingencies to Rs2,700 crore. Of the total provisioning, Rs2,038 crore was for loan loss provisions, the bank said in a regulatory filing.
The bank, however, said that certain provisioning made in the quarter were precautionary in nature and not anticipatory. Moreover, the bank also informed that it wrote off loans worth Rs1,589 crore in the September quarter.
HDFC Bank said its asset quality saw a slight deterioration in the September quarter as gross NPAs as a percentage of gross advances rose 5 bps year-on-year to 1.38 per cent. However, on a sequential basis, the bad loan ratio was down 2 bps.
The bank's total income for the quarter ended 30 September stood at Rs33,755 crore, which is a 19.6 per cent increase from Rs28,215.2 crore in the corresponding quarter of the previous fiscal.
HDFC bank’s net interest income (NII) rose 14.9 per cent y-o-y to Rs13,515 crore while its net interest margin (NIM) stood at 4.2 per cent, down 10 basis points from Q2 of FY19.
HDFC Bank said its other income included fees and commissions amounting to Rs4,054.5 crore, foreign exchange and derivatives revenue of Rs551.7 crore, gain on sale/revaluation of investments of Rs480.7 crore and miscellaneous income, including recoveries and dividend, of Rs502 crore.
Total advances for the quarter stood at Rs8,96,000 crore, an increase of 19.5 per cent year-on-year while the domestic component grew 20.7 per cent. Domestic retail loans grew 14.7 per cent while domestic wholesale loans grew 27.9 per cent, the bank stated in a filing. The domestic loan mix as per Basel 2 classification between retail and wholesale was 52:48, the bank said.
Total deposits with the bank as of 30 September 2019 stood at Rs10,21,000 crore, an increase of 22.6 per cent. HDFC’s current and savings account (CASA) deposits grew 14.7 per cent - savings account deposits growing to Rs2,64,000 ceore and current account deposits to Rs1,36,000 crore.
HDFC Bank’s capital adequacy ratio stood at 17.5 per cent in the quarter ended 30 September 2019, up 40 bps year-on-year.