The country's largest private sector lender HDFC Bank reported a healthy set of earnings for the quarter ended March 2019 on April 20, meeting analyst expectations on all parameters.
The bank's net profit during the quarter grew by 22.62 percent year-on-year (YoY) to Rs 5,885.12 crore, driven by growth in its net interest income and by growth in its operating income.
Net interest income, the difference between interest earned and interest expended, increased 22.8 percent to Rs 13,089.5 crore driven by average asset growth of 19.8 percent and a core net interest margin for the quarter of 4.4 percent, HDFC Bank said.
HDFC Bank registered a healthy credit growth of 24.5 percent in Q4 with the total loan book at Rs 8,19,401 crore. This was well above system growth of 13.24 percent. The bank's deposits grew at the pace of 17 percent over last year at Rs 9,23,141 crore, as compared to the growth of 10 percent in the banking system.
"The bank's continuing focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 118 percent, well above the regulatory requirement," HDFC Bank said in a statement.
Domestic advances increased by 24.6 percent YoY, while Current Accounts Savings Accounts (CASA), which is a low cost source of funding for lenders, constituted 42.4 percent of total deposits. It grew by 14 percent over the year.
Domestic retail loans rose by 19 percent and wholesale loans grew by 31.9 percent YoY, it added.
Operating income climbed 22.7 percent to Rs 10,843.6 crore for the quarter that ended on March 2019 YoY while operating expenses rose by 17.6 percent compared to year-ago period.
Other income (or non-interest income) jumped 15.2 percent year-on-year to Rs 4,871.2 crore in Q4, driven by fees & commissions which grew by 11 percent YoY and gain on revaluation/ sale of investments.
"The core cost-to-income ratio for the quarter was at 40.1 percent as against 40.6 percent for corresponding quarter ended March 2018," the bank said.
Asset quality has seen some improvement compared to previous quarter. Gross non-performing assets (NPA) as a percentage of gross advances declined at 1.36 percent in Q4 against 1.38 percent in Q3.
Provisions and contingencies at Rs 1,889.22 crore during the quarter declined 14.6 percent sequentially, but increased 22.6 percent compared to same period last year. The provisioning coverage ratio was at 71 percent.
The bank's capital adequacy ratio improved to 17.1 percent as on March 31, 2019, from 14.8 percent a year ago. It's capital conservation buffer was at 1.875 percent. The bank also met the additional requirement of 0.15 percent on account of being identified as Domestically Systematic Important Bank (D-SIB).
For the financial year 2018-19, the bank registered a 20.5 percent year-on-year growth in net profit at Rs 21,078.1 crore and its net interest income increased by 20.3 percent to Rs 48,243.22 crore.
The bank recommended a dividend of Rs 15 per share for financial year 2018-19 against Rs 13 per share for previous year.
The scrip, on April 18, closed at Rs 2,290.15, down 0.63 percent but in last six months, it rallied 16 percent.
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