NEW DELHI: , at last, delivered a 20 per cent-plus quarterly profit growth, which it was known for in the past, even as the profit figure itself missed analyst estimates by a small margin. Net interest income (NII) growth came in double digits but that also lagged Street estimates. Asset quality improved, and net interest margin (NIM) came in at 4 per cent while credit cost inched up.
Here are the key takeaways from the lender’s quarterly earnings:
Profit growth at last tops 20%
Market watchers would tell how the private lender had been consistent with earnings growth in the past. While the last two years were difficult for India Inc at large, the March quarter results saw HDFC Bank achieving a 20 per cent-plus growth again, the first such instance after a 33 per cent growth in the third quarter of FY20.
The lender reported a 22.8 per cent year-on-year (YoY) rise in net profit for the March quarter at Rs 10,055.20 crore after providing for Rs 2,989.50 crore in taxation.
It, however, missed the growth of 24-28 per cent that many analysts had forecasted for the quarter. A poll of analysts on ET NOW had projected a profit figure of Rs 10,200 crore.
Asset quality improves, provisions rise
March was the third straight quarter when HDFC Bank reported a fall in gross NPAs as a percentage of total advances. It stood at 1.47 per cent in the June quarter of 2021. Since then, it has been easing.
Gross non-performing assets as a percentage of total advances stood at 1.17 per cent for the March quarter compared with 1.26 per cent in the December quarter and 1.32 per cent in the year-ago quarter. Total provisions were 182 per cent of the gross NPAs as of March 31.
Provisions and contingencies for the quarter rose sequentially to Rs 3,312.35 crore from Rs 2,993.98 crore in the December quarter but were less than the year-ago quarter’s Rs 4,693.70 crore.
NII growth in double digits but…
Net interest income (NII), the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors, rose 10.2 per cent YoY to Rs 18,872.70 crore from Rs 17,120.20 crore in the year-ago quarter but missed estimates. An ET NOW poll had pegged the NII figure at Rs 19,400 crore.
Net interest margin (NIM) stood at 4 per cent on total assets and 4.2 per cent based on interest-earning assets. NIM for the December quarter stood at 4.2 per cent and 4.1 per cent in the year-ago quarter.
Advances & deposits rise
Deposits for the quarter were up 16.8 per cent YoY at Rs 15,59,217 crore. Advances were up 20.8 per cent YoY at Rs 13,68,821 crore for the quarter. The bank said it continued to add new liability relationships at a robust pace of 24 lakh during the quarter. The liquidity coverage ratio, it said, stood at 112 per cent, well above the regulatory requirements.
Credit costs stable
Total credit cost for the quarter stood at 0.96 per cent, a bit higher than 0.94 per cent in the December quarter and 1.64 per cent in the same quarter last year. Total balance sheet grew 18.4 per cent YoY to Rs 20,68,535 crore from Rs 1,74,6871 crore.
The bank said its non-interest revenues for the quarter were up 28.8 per cent YoY at Rs 7,637.10 crore compared with Rs 7,593.90 crore in the year-ago quarter. Trading income rose 10.6 per cent YoY while fee income came in at Rs 5,630 crore. Pre-provision operating profit, excluding trading income, stood at Rs 16,357 crore, up 10.2 per cent.
CASA deposits up 22%
CASA deposits were up 22 per cent for the quarter, with savings account deposits at Rs 511,739 crore and current account deposits at Rs 239,311 crore. Time deposits were at Rs 8,08,168 crore, up 12.3 per cent YoY.
CASA deposits comprised 48.2 per cent of total deposits as of March 31, 2022, the bank said.
Total balance sheet size as of March 31, 2022 was Rs 2,068,535 crore, up 18.4 per cent over Rs 1,746,871 crore in the year-ago quarter.
Aggressive branch additions
The bank added 563 branches and 7,167 employees during the quarter and 734 branches and 21,486 employees during the year.
“This, and other investments made during the year, will position the bank to capitalise on the growth opportunity,” HDFC Bank said.
As of March 31, 2022, the bank’s distribution network was at 6,342 branches and 18,130 ATMs/Cash Deposit & withdrawal machines (CDMs) across 3,188 cities compared with 5,608 branches and 16,087 ATMs/CDMs across 2,902 cities in the year-ago quarter.
“50 per cent of our branches are in semi-urban and rural areas. In addition, we have 15,341 business correspondents, which are primarily manned by Common Service Centres (CSC). Number of employees stood 1,41,579 as of March 31, 2022,” the bank said.