HDFC Bank Q1 net profit up 16.1% at Rs7,729.6 cr

HDFC Bank, the country’s largest private sector lender, has reported a 16.1 per cent year-on-year increase in its fiscal first quarter net profit at Rs7,729.6 crore, against a net profit of Rs6,658.62 crore in the corresponding period of the previous fiscal.

Provisions for the quarter was 24 per cent higher at Rs4,830.84 crore, against Rs3,891.52 crore in the year-ago quarter. Further, the bank’s asset quality also deteriorated with the percentage of gross non-performing assets (NPAs) rising to 1.47 per cent from 1.32 per cent sequentially and 1.36 per cent year-on-year.
Gross NPAs in absolute terms stood at Rs17,098.51 crore against Rs15,086 crore in the preceding three months and Rs13,773.46 crore in the year-ago qurter.
Provisions and contingencies for the quarter included specific loan loss provision of Rs4,219.7 crore and general and other provisions of Rs611.1 crore. 
HDFC Bank said the second wave of the paemic disrupted business activities for close to two-thirds of the quarter, leading to a decrease in efficiency in collection efforts and a higher level of provisioning.
The bank also undertook a one-time restructuring for 3,36,107 accounts where the exposure stood at around Rs7,801 crore, as per an RBI report. Of this, personal loans stood at Rs5,457.35 crore and corporate loan recast at Rs1,735.30 crore. The rest belonged to MSMEs and others.
Under the central bank’s second resolution framework announced in May, it has implemented such plans for 33 borrower accounts having aggregate exposure of Rs10.64 crore.
The deterioration in asset quality indicates that banks would see stress in their books due to the second wave. However, analysts expect the impact to be considerably lesser this time than what was seen after the pandemic hit last year.
HDFC Bank said its total advances as of June 2021 rose 14.4 per cent year-on-year to Rs1,147,652 crore. Retail loans grew 9.3 per cent, commercial and rural banking loans rose 25.1 per cent and other wholesale loans grew 10.2 per cent. Domestic retail advances stood at Rs5,23,489 crore during the quarter.
During the first quarter, the bank’s net interest income (interest earned less interest expended) increased to Rs17,009 crore from Rs15,665.4 crore in the year-ago period.
The board of HDFC Bank on Saturday decided to tap the international markets to raise capital through Basel-III compliant additional tier-I capital (AT1 bonds) on a public or a private placement basis. However, the lender did not disclose the size of the proposed issue.