Country's second largest private sector lender HDFC Bank, on October 19, has reported a healthy 26.75 percent year-on-year (YoY) growth in profit for the quarter that ended on September 2019 with stable asset quality.
Profit after tax for the quarter increased to Rs 6,345 crore against Rs 5,005.73 crore earned in the same period last year. The growth was driven by average asset growth of 15 percent and a core net interest margin for the quarter of 4.2 percent.
Net interest income during the quarter grew by 14.89 percent to Rs 13,515.04 crore YoY with loan growth at 19.5 percent as compared to same period last year.
The bank said domestic advances grew by 20.7 percent with retail loans growth of 14.7 percent and wholesale at 27.9 percent YoY.
Its total deposits at the end of September quarter stood at Rs 10,21,615 crore, an increase of 22.6 percent YoY, with CASA deposits rising 14.7 percent and time deposits increasing 28.3 percent YoY, it added.
"The provisional figure were already indicating a strong advances growth so certainly numbers were expected to be good and the only point was to be seen is whether the asset quality remains good or not and on that front again the bank has really reported a very good number. The NPA number has been very much under control, it has improved a bit on a sequential basis. Absolutely good numbers," Siddharth Purohit of SMC Institutional Equities told CNBC-TV18.
Asset quality remained stable for the quarter with gross non-performing assets as a percentage of gross advances falling sequentially to 1.38 percent from 1.40 percent, and net NPA as a percentage of new advances declining to 0.42 percent against 0.43 percent QoQ.
Its NPA from agricultural segment was unchanged at 1.2 percent QoQ in Q2. The bank said it held floating provisions of around Rs 1,451 crore as on September 2019 and total provisions were 114 percent of the gross non-performing loans as of Q2FY20.
HDFC Bank said provisions and contingencies increased sharply by 48.39 percent to Rs 2,700.68 crore in Q2 compared to year-ago period while the same grew by 3.33 percent QoQ.
The lender improved its cost-to-income ratio for the quarter to 38.8 percent, from 39.9 percent in same period last year.
The stock rallied 16 percent year-to-date, outperforming the Nifty50 as well as Bank Nifty which both gained more than 7 percent.
"Given the current environment, HDFC Bank has given fairly decent numbers and market should react positive to this stock on October 22. Valuations has never been a concern for HDFC Bank. I feel a positive reaction for HDFC given the current numbers. I still maintain a buy on this and would recommending buying in the stock," Siddharth Purohit said.
Other income (non-interest income) increased significantly by 39.18 percent to Rs 5,588.72 crore in July-September quarter YoY while pre-provision operating profit climbed 23.40 percent YoY to Rs 11,698.08 crore in Q2FY20.
Fees and commissions, which contributed more than 72 percent to other income, grew by 23 percent year-on-year to Rs 4,054.5 crore in Q2.
Foreign exchange & derivatives revenue increased 31.4 percent to Rs 551.7 crore while gain on sale/ revaluation of investments stood at Rs 480.7 crore during the quarter ended September 2019 against loss of Rs 32.8 crore in the corresponding period last year, the lender said in its BSE filing.
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