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HDFC Bank Q2 takeaways: Provisions spike but asset quality stable

NEW DELHI: HDFC Bank has beaten analyst estimates for the September quarter. A 26.8 per cent year-on-year (YoY) rise in standalone net profit was higher than 20 per cent growth Street were anticipating.

The private lender’s profit rose to Rs 6,345 crore in the second quarter from 5,005.73 crore in the corresponding quarter last year. Analysts in an ET NOW poll had projected profit at Rs 6,100 crore.

Here are key takeaways from the banking major’s Q2 results:

Provisions spike, but asset quality stable: Provisions and contingencies for the lender jumped 48 per cent for the quarter to Rs 2,700.70 crore from Rs 1,820 crore in the year-ago quarter

That said, gross non-performing assets (NPAs) for the quarter stood at 1.38 per cent of gross advances as on September 30, which were less than 1.40 per cent in June quarter. The bank had reported 1.33 per cent NPA in the year-ago quarter.

NIM at 4.2 per cent misses St expectations: Analysts were largely expecting Net interest margin (NIM) to come in at 4.3 per cent. The private lender reported a 14.89 per cent rise in net interest income (NII) at Rs 13,515.0 crore crore compared with Rs 11,763.4 crore in the same quarter last year. Non-interest revenue or other income came in at Rs 5,588.70 crore, up 39.2 per cent over Rs 4,015.60 crore in the corresponding quarter of last year.

Advances growth lags deposit’s: Total deposits stood at Rs 10,21,615 crore, up 22.6 per cent YoY. Total advances as of September 30 were at Rs 8,96,984 crore, up 19.5 per cent. Domestic advances rose 20.7 per cent YoY, the bank said.

Wholesale loan growth at 27.9 per cent, retail 14.7 per cent: The bank’s said its focus on deposits helped it maintain a healthy liquidity coverage ratio at 133 per cent, well above the regulatory requirement. As per regulatory segment classification, domestic retail loans grew by 14.7 per cent and domestic wholesale loans grew by 27.9 per cent. The domestic loan mix as per Basel 2 classification between retail: wholesale was 52:48. Overseas advances constituted 3 per cent of total advances.

CASA grows 14.7 per cent: CASA deposits grew by 14.7 per cent, with savings account deposits at Rs 2,64,445 crore and current account deposits at Rs 1,36,791 crore. Time deposits stood at Rs 620,380 crore, an up 28.3 per cent over the previous year, resulting in CASA deposits comprising 39.3 per cent of total deposits.

Balance Sheet size expands: The bank said its balance sheet size at the end of September quarter rose Rs 13,25,072 crore from Rs 11,69,898 crore in the year-ago quarter.

Subsidiary HDFC Securities sees drop in total income: HDFC Securities, where the bank has 97.3 per cent reported a drop in total income to Rs 189.3 crore against Rs 199.5 crore in the yea-ago quarter. PAT rose to Rs 91 crore from 82.9 crore YoY. Another subsidiary HDFC Financial Services reported drop in profit to Rs 213 crore from 246.30 crore despite a 24.8 per cent YoY rise in net interest income at Rs 971.8 crore (Rs 777.80 crore YoY).

Source: Economic Times