HDFC Bank Q2 PAT up 30% aided by robust loan growth

Driven by a robust loan growth coupled with lower provisions HDFC Bank , the second largest private sector lender, on Friday reported more than 30% year on year jump in its second quarter (July-September) net profit at Rs 1,560 crore. Net interest income (NII) or the difference between interest earned and paid out, shot up nearly 27% y-o-y to Rs 3,732 crore.

A poll by CNBC Awaaz expected net profit at 28% while NII at 23%. The results were broadly better-than-expected.

The bank's loan book expanded by 23% y-o-y to Rs 2.32 lakh crore, much above the 17% credit growth mark as projected by the Reserve Bank of India for the entire industry in FY13.

When the fear of non-performing assets (NPAs) continues to loom large for most of the banks, HDFC Bank's substantial loan growth did not come at the cost of credit quality.

This was evident in its stable NPA ratios. Gross NPA ratio improved to 0.91% as against 0.97% in April-June quarter and 1% in Q2, FY12. Net NPA ratio remained unchanged at 0.20%.

With asset quality remaining stable, provisions and contingencies for the quarter ended September 30, 2012 were Rs 293 as against Rs 366 crore in Q2, FY12, the bank said in a press release.

The provisions consisted of three components: specific, general and floating. As a standard practice, the bank maintains a floating provision every quarter in anticipation of bad loans especially when it manages to keep NPAs under control. The practice, according to banking analysts, would help retain the bank's good health.

Its deposit base rose around 19% y-o-y to Rs 2.74 lakh crore achieving RBI's projection for deposit growth at 16% in 2012-13. Savings deposits grew nearly 15% to Rs 79,150 crore.

saikat.das@network18online.com