Moneycontrol Bureau
HDFC Bank, the country's second largest private sector lender, matched analysts' expectations on Wednesday with September quarter profit rising 20.5 percent to 2,869.5 crore compared to year-ago period. Profit growth was driven by other income, NII and operating profit despite higher provisions and tax expenses.
Net interest income (NII) increased 21.2 percent to Rs 6,681 crore in quarter ended September 2015 compared to Rs 5,511 crore in corresponding quarter of last fiscal with net interest margin of 4.2 percent (declined compared to 4.3 percent on sequential basis).
Growth in NII, the difference between interest earned and interest expended, was driven by strong advances that surged 27.9 percent year-on-year to Rs 4,18,541 lakh crore. Deposits during same period increased 29.7 percent to Rs 5,06,908.7 lakh crore.
Profit was expected at Rs 2,875 crore and net interest income at Rs 6,598 for the quarter, according to a CNBC-TV18 poll.The fall in net interest margin was due to strong increase in fixed deposits and base rate cut, said Paresh Sukthankar, Deputy MD in a press conference post earnings, adding, "We will maintain margin at 4.1-4.4 percent for the year." The bank cut base rate by 65 basis points to 9.35 percent since April.
During July-September quarter, other income (non-interest income) grew by 24.7 percent to Rs 2,551.8 crore and operating profit rose by 24.2 percent to Rs 5,043 crore year-on-year, said the bank in its filing.
Provisions for bad loans in Q2FY16 jumped 49.4 percent to Rs 681.3 crore compared to year-ago period but declined 6.4 percent sequentially.
Asset quality has improved during the quarter with gross non-performing assets (NPA) down 4 basis points quarter-on-quarter and 11 bps year-on-year to 0.91 percent. Net NPA also declined to 0.25 percent in September quarter compared to 0.27 percent in preceding quarter and 0.28 percent in same quarter last fiscal.
In absolute terms, gross NPA increased 4.8 percent sequentially and 13.9 percent on yearly basis to Rs 3,827.8 crore. Net NPA too rose 13 percent year-on-year and 1 percent quarter-on-quarter to Rs 1,037.7 crore in quarter gone by.
Capital adequacy ratio has fallen to 15.5 percent in September quarter compared to 15.7 percent each in Q2FY15 and Q1FY16. Cost-to-income ratio dropped to 45.4 percent from 46.3 percent year-on-year.
Tax expenses stood at Rs 1,492 crore for the quarter, an increase of 22 percent over Rs 1,222.8 crore in corresponding period of previous fiscal.
At 12:40 hours IST, the scrip of HDFC Bank was quoting at Rs 1,093.90, down Rs 1.25, or 0.11 percent on the Bombay Stock Exchange.
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