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HDFC Bank Q2 net up 17.6% on robust interest income

October 16, 2021 root Banking & Finance

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Private sector lender HDFC Bank’s standalone net profit increased 17.6 per cent in the second quarter of the current fiscal supported by a robust growth in net interest income.

For the quarter ended September 30, the bank reported net profit of ₹8,834.3 crore against ₹7,513.11 crore in the corresponding quarter last fiscal.

Net interest income grew 12.1 per cent to ₹17,684.4 crore (₹15,776.4 crore). Core net interest margin was at 4.1 per cent.

Other income was up 21.5 per cent at ₹7,400.8 crore (₹6,092.5 crore).

Provisions and contingencies increased 6 per cent to ₹3,924.7 crore (₹3,703.5 crore).

“Total provisions for the current quarter included contingent provisions of approximately ₹1,200 crore,” HDFC Bank said in a statement on Saturday.

Asset quality remained stable and improved on a sequential basis.

Gross non performing assets (GNPAs) rose to ₹16,346.07 crore as on September 30 (against ₹11,304.60 crore).

GNPAs declined 12 basis points during the quarter to 1.35 per cent of gross advances against 1.47 per cent as on June 30, 2021. However, GNPAs in the reporting quarter were 27 basis points higher vis-a-vis the year-ago level of 1.08 per cent. Net NPAs declined to 0.4 per cent of net advances as on September 30, 2021 compared to 0.48 per cent as on June 30, 2021. However, net NPAs rose by 23 basis points vis-a-vis the year-ago level of 0.17 per cent.

Restructured book

The number of requests the bank received for restructuring personal and business loans stood at 6.45 lakh and 6.12 lakh, respectively, under the RBI’s Resolution Framework 2.0 of May 2021. Of this, resolution plans were implemented in the case of 5.5 lakh personal loan accounts and 5.3 lakh business loan accounts. It also received requests for resolution from 9,870 small businesses, of which 6,934 accounts were taken up for resolution.

The total exposure to these accounts before the implementation of the resolution plan was ₹17,397.11 crore.

Meanwhile, of the 3.36 lakh accounts restructured under the Resolution Framework 1.0 with an exposure of ₹7,829.48 crore, ₹1,687.02 crore slipped into NPA in the first half of the fiscal and ₹856.66 crore was written off.

Advances and deposits

Total deposits increased 14.4 per cent on a year on year basis to ₹14.06 lakh crore. Advances increased 15.5 per cent to ₹11.98 lakh crore during the period.

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Q1 performance: HDFC Bank profit up 16.1% to Rs 7,730 crore

July 18, 2021 root Banking & Finance

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Other income of the bank grew 54.3% y-o-y at Rs 6,288.5 crore. The four components of other income were fees and commissions of Rs 3,885.4 crore, foreign exchange and derivatives revenue of Rs 1,198.7 crore, gain on sale or revaluation of investments of Rs 601.0 crore.

Amid disruptions due to Covid-19, the largest private lender HDFC Bank on Saturday posted lower than estimated net profit of Rs 7,730 crore during the June quarter as the asset quality of the bank worsened. Although the net profit of the bank registered a 16.1% year-on-year (y-o-y) growth, the bottomline missed the Rs 7,931-crore consensus estimate by Bloomberg. The net interest income (NII) of the lender, however, grew 9% y-o-y to Rs 17,009 crore, but remained flat sequentially.

The bank has acknowledged that business activities remained curtailed for almost two-thirds of the quarter due to Covid-19, which has led to a decrease in retail loan originations, sale of third-party products, card spends and efficiency in collection efforts. The lower business volumes, coupled with higher slippages, resulted in lower revenues, as well as an enhanced level of provisioning.

Provisions during the quarter increased 24% y-o-y to Rs 4,831 crore, compared with Rs 3,892 crore in the year-ago quarter. Provisions and contingencies for the quarter included specific loan loss provisions of Rs 4,219.7 crore and other provisions of Rs 611 crore. The core net interest margin (NIM) of the bank declined 10 basis points (bps) sequentially to 4.1%, compared to 4.2% in the March quarter.

The asset quality of the lender worsened during the June quarter. Gross non-performing assets (NPAs) ratio of the lender declined 8 bps to 0.48%, compared to gross NPAs of 0.4% in the previous quarter. However, net NPAs ratio improved 5 bps to 0.45% from 0.5% in the March quarter. The total credit cost ratio remained at 1.67%, compared to 1.64% in the March quarter and 1.54% in the quarter ending June 30, 2020.

The bank said it has restructured loans worth Rs 7,800 crore, under the Reserve Bank of India’s one-time restructuring scheme. This included Rs 5,457 crore worth retail loans, and Rs 1,735 crore worth of corporate loans. The bank has also restructured loans worth Rs 608 crore to other borrowers under the scheme.

Total advances rose 14.4% y-o-y to Rs 11.5 lakh crore, of which retail loans were up 9.3% y-o-y to Rs 4.58 lakh crore. Similarly, commercial and rural banking loans were up 25% from a year ago to Rs 3.86 lakh crore. The bank also said wholesale loans were up 10% y-o-y to Rs 3.14 lakh crore.

Total deposits of the bank grew 13.2% y-o-y to Rs 13.4 lakh crore. CASA deposits grew by 28.1% y-o-y with savings account deposits at Rs 4.2 lakh crore and current account deposits at Rs 1.85 lakh crore.

The bank’s total capital adequacy ratio (CAR) as per Basel III guidelines was at 19.1% as on June 30 against a regulatory requirement of 11.075%.

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HDFC Bank net up 18% on higher other income

April 18, 2021 root Banking & Finance

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On a proforma basis, the gross NPA ratio fell four bps from 1.36% at the end of December 2020.

HDFC Bank on Saturday reported an 18.2% year-on-year (y-o-y) growth in net profit for the quarter ended March to Rs 8,186.51 crore on the back of a 26% y-o-y rise in other income to Rs 7,594 crore, with net interest income (NII) growing 12.6% y-o-y to Rs 17,120 crore.

The bank’s provisions rose 24% y-o-y to Rs 4,693.7 crore. In a statement, HDFC Bank said the total provisions for the current quarter include approximately Rs 1,300 crore in contingent provisions. The bank’s gross non-performing asset (NPA) ratio in Q4 rose 41 basis points (bps) sequentially to 1.32% and the net NPA ratio rose 31 bps to 0.4% as the Supreme Court vacated a stay on recognition of bad loans after August 31, 2020. On a proforma basis, the gross NPA ratio fell four bps from 1.36% at the end of December 2020.

“The bank also continues to hold provisions as on March 31, 2021, against the potential impact of Covid-19 based on the information available at this point in time and the same are in excess of the RBI prescribed norms,” HDFC Bank said.

It held floating provisions of Rs 1,451 crore and contingent provisions of Rs 5,861 crore as on March 31, 2021. Total provisions — comprising specific, floating, contingent and general provisions — were 153% of gross NPAs as on March 31, 2021. The core net interest margin (NIM) in Q4 stood unchanged on a sequential basis at 4.2%.

Total advances as on March 31, 2021, were Rs 11.33 lakh crore, up 14% over March 31, 2020. Domestic advances grew 14.1% y-o-y. Domestic retail loans grew 6.7% and domestic wholesale loans grew by 21.7%. The domestic loan mix as per Basel 2 classification between retail:wholesale was 47:53. Overseas advances constituted 3% of total advances.

Total deposits as of March 31, 2021 were Rs 13.35 lakh crore, up 16.3% over March 31, 2020. Current account savings account (CASA) deposits grew 27%, with SA deposits at Rs 4.03 lakh crore and CA deposits at Rs 2.12 lakh crore. Time deposits stood at Rs 7.19 lakh crore, an increase of 8.5% over the corresponding quarter of the previous year. The CASA ratio was 46.1%, as against 42.2% a year ago.

The lender’s total capital adequacy ratio (CAR) as per Basel III guidelines was at 18.8% as on March 31, 2021, up from 18.5% as on March 31, 2020, and as against a regulatory requirement of 11.075%. Tier-1 CAR was at 17.6% as of March 31, 2021, compared to 17.2% as of March 31, 2020. The common equity tier-1 (CET-1) ratio was at 16.9% as of March 31, 2021. Risk-weighted assets were at Rs 11.31 lakh crore, as against Rs 9.95 lakh crore as on March 31, 2020.

The bank’s NBFC subsidiary HDB Financial Services posted a net profit of Rs 502.8 crore in Q4FY21, down 51.4% from Rs 1,037 crore in Q4FY20. The company’s provisions and contingencies for the quarter were at Rs 613 crore, up 56% y-o-y. The total loan book was Rs 58,947 crore as on March 31, 2021, up 5.4% from Rs 55,930 crore as on March 31, 2020. As on March 31, 2021, the gross NPA ratio based on the approach used for non-bank lenders was 3.9%, up from 3.5% on March 31, 2020 and down from 5.9% as per the proforma approach as on December 31, 2020.

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Analysts upgrade HDFC’s earnings outlook after stellar Q3 show

February 3, 2021 root Banking & Finance

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Growth in home loans was seen in both the affordable housing segment as well as high-end properties, HDFC said.

Housing Development Finance Corporation (HDFC) has reported a strong 27% year-on year (y-o-y) increase in its adjusted net profit before tax to Rs 2,908 crore in Q3FY21. Strong home sales and an equally healthy growth in housing loans helped the mortgage player post a stellar set of numbers for the December quarter.

Individual disbursements during the quarter rose by 26% against a 32% year-on-year increase in loan approvals. Earnings were driven by an increase in net interest income (NII), which saw a robust growth of 26% y-o-y and 12% quarter-on-quarter (q-o-q) at Rs 4,068 crore.

The strong demand for housing appears to be sustainable and not a case of suppressed demand. The lender said the month of December witnessed the highest-ever levels in terms of receipts, approvals and disbursements.

Keki Mistry, CEO of HDFC Limited, said: “We continued seeing strong growth in demand for housing loans and the growth was better than what we expected in October, when we were fairly optimistic. Our individual loan approvals were up 32% compared to what it was in the quarter ended December 2019. While loan approvals were higher by 32%, disbursements rose 26%.”

The increase in housing demand has not only sustained but has picked up pace even sequentially for the mortgage major. During the December quarter, 91% of individual disbursements were for property deals entered over the past four months, which suggest that demand is expected to remain strong in the coming quarters too. HDFC’s net interest margins increased 20 basis points sequentially and 10 basis points y-o-y to 3.4%. The spread on the individual loan book was 1.94% and the same on the non-individual book was 3.14%.

Analysts reacted positively to the performance, with some brokerages even upgrading earnings estimates for the coming fiscal. CLSA has raised FY22/23 earnings estimates of HDFC by 4-5% on higher margins. Morgan Stanely said HDFC’s retail disbursements and revenue momentum have been strong this quarter. Similarly, Credit Suisse noted that individual growth has remained strong for the lender and the asset quality has been stable with healthy provisioning.

The collection efficiency for individual loans in the month of December stood at 97.6%, compared with 96.3% in September. The loans on the assets under management basis grew 9% y-o-y to Rs 5,52,167 crore, against Rs 5,05,401 crore in Q3FY20. Individual loans comprised 76% of the AUM as on December. The individual loan disbursements grew at 26% over the corresponding quarter of the previous year. Growth in home loans was seen in both the affordable housing segment as well as high-end properties, HDFC said.

In its report, Motilal Oswal Institutional Equities said, “The provisions at Rs 5,900 crore were much higher than our estimate of Rs 4,000 crore.” The report said it expects HDFC to report core return on assets (RoA) of 2% and 13% return on equity (RoE) over FY22-23 earnings. A report by Emkay said HDFC has registered a healthy growth and maintained stable asset quality. “HDFC managed to maintain healthy growth momentum of around 16% y-o-y on an improvement in housing demand across geographies,” Emkay said.

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