India's second largest private sector HDFC Bank on Wednesday reported 30 percent year-on-year rise in its first quarter (April-June) net profit to Rs 1,844 crore, aided by a spike in the other income and robust loan growth. However, at 14:30 hrs HDFC Bank shares were down 3 percent to trade at Rs 659 on NSE. Read on...
India's second largest private sector HDFC Bank continued to keep the markets enthused with its magic net profit figure but this time, it was with a little nudge. The bank on Wednesday reported 30 percent year-on-year rise in its first quarter (April-June) net profit to Rs 1,844 crore, aided by a spike in the other income and robust loan growth.
However, HDFC Bank shares fell more than 2 percent to close the day's trading at Rs 663 on NSE. A marginal rise of 10 basis points in the bank's net non-performing asset ratio, which stood at 0.30 percent as against a static level 0.20 percent recorded for last so many quarters.
The net interest income (NII) or the difference between interest earned and paid out, increased 21 percent y-o-y to around Rs 4,420 crore. Net interest margin (NIM) was little changed at 4.6 percent. Other income jumped more than 30 percent y-o-y to Rs 1,926 crore. The quarterly performance was almost in line with the expectations.
After being penalised (a sum of Rs 4.5 crore) by the Reserve Bank of India for violating Know Your Customers (KYC) norms, this strong set of numbers would help regain its brand image.
The bank expanded its loan book by more than 21 percent y-o-y to about Rs 2.59 lakh crore. Gross NPA ratio remained unchanged at 1 percent. Provisions and contingences stood at Rs 527 crore as against Rs 582 crore. The provisions consisted of specific loan loss, general and floating provisions, which stood at Rs 1,865 crore compared with Rs 1,680 crore a year back.
"HDFC Bank Q1 earnings were as per our expectation," Vaibhav Agrawal, banking analyst from Angel Broking told moneycontrol.com.
"Despite an increase in the net NPA ratio, the bank is better placed in the industry when compared with other banks, which are facing continuous asset quality stress. However, the rise in the net NPAs indicates that a weak economy can also impair the bank's credit quality, maybe with a smaller degree," he said.
At the time of sluggish industry deposit growth, HDFC Bank managed to grow its deposits at an impressive 18 percent at Rs 3.03 lakh crore. The share of current account and savings account (CASA) grew 10.5 percent to around Rs 46,100 crore. The share of CASA as on June 30, 2013 was at 44.7 percent compared with 47.4 percent in the previous quarter.
CASA is the cheap source of funds wherein the bank pays 0-4 percent rate of interest.