HDFC Bank, the country's largest private sector lender, has reported a standalone profit of Rs 8,758.3 crore for the quarter ended December 2020, rising 18.1 percent year-on-year, thus beating the CNBC-TV18 poll estimate which was pegged at Rs 8,264.8 crore. The growth was led by non-interest income and pre-provision operating profit with improved asset quality performance.
Its net interest income, the difference between interest earned and interest expended, grew by 15.1 percent to Rs 16,317.6 crore in Q3FY21, compared to the corresponding period, driven by advances growth of 15.6 percent, and a core net interest margin for the quarter of 4.2 percent. The NII was below the CNBC-TV18 poll estimate of Rs 16,370.4 crore for the quarter under review.
"The persistent focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 146 percent, well above the regulatory requirement," said the bank.
The lender said its loan book increased by 15.6 percent YoY to Rs 10.82 lakh crore, and deposits by 19.1 percent YoY to Rs 12.71 lakh crore at the end of December quarter 2020.
The CASA ratio as of December 2020 jumped to around 43 percent compared to 39.5 percent at the end of December 2019 and 41.6 percent as of September 2020.
Asset quality of the bank has seen improvement in Q3FY21, with gross non-performing assets (NPA) as a percentage of gross advances falling 27 bps sequentially to 0.81 percent for the quarter December 2020, while net NPA declined to 0.09 percent in the quarter ended December 2020, compared to 0.17 percent in September quarter 2020.
Provisions and contingencies increased 12.2 percent year-on-year to Rs 3,414.13 crore in Q3FY20, but the same declined 7.8 percent sequentially, which was largely on expected lines. "Total provisions included contingent provisions of approximately Rs 2,400 crore for proforma NPA," said the bank.
The RBI directed banks that accounts that were not declared NPA till August 2020 shall not be declared as NPA until further orders, but HDFC Bank said if the bank had classified borrower accounts as NPA after August 2020, the proforma gross NPA ratio would have been 1.38 percent in Q3FY21, against 1.37 percent in Q2FY21, and its proforma net NPA ratio would have been 0.40 percent in Q3FY21.
Pending disposal of the case, the bank, as a matter of prudence, has made a contingent provision in respect of these accounts, it added.
The restructuring under RBI resolution framework for COVID-19 was approximately 0.5 percent of advances, the lender added.
The total credit cost ratio at 1.25 percent in the quarter ended December 2020, declined from 1.41 percent in previous quarter and 1.29 percent in the corresponding period, the bank said.
Non-interest income (other income) grew by 11.6 percent year-on-year to Rs 7,443.22 crore in the October-December quarter of 2020, driven by fees & commissions and sale/revaluation of investments.
Fees and commissions at Rs 4,974.9 crore grew by 9.9 percent YoY in Q3FY20 and foreign exchange & derivatives revenue at Rs 562.2 crore in the same period increased 7 percent compared to the corresponding period, while the bank reported gain on sale or revaluation of investments at Rs 1,109 crore, rising 17.9 percent YoY.
Pre-provision operating profit was better than analysts' expectations, rising 17.3 percent year-on-year to Rs 15,186.02 crore for the quarter ended December 2020.
HDFC Bank shares rallied 33.2 percent during the December quarter 2020 and gained 13 percent last year, while Bank Nifty surged 46 percent and fell 2.8 percent, respectively.