HDFC Bank's third quarter earnings matched analysts' expectations on Monday. Profit increased 20 percent year-on-year to Rs 3,357 crore during the quarter, supported by operating profit, net interest income and other income despite higher tax cost and provisions.
Net interest income, the difference between interest earned and interest expended, climbed 24 percent to Rs 7,068.51 crore in Q3 compared to Rs 5,700 crore in year-ago period driven by average assets growth of 28.2 percent and a net interest margin for the quarter of 4.3 percent (against 4.4 percent Y-o-Y), says the country's second largest private sector bank.
Advances grew by 25.7 percent year-on-year to Rs 4.36 lakh crore while deposits increased by 26.5 percent to Rs 5.24 lakh crore in December quarter. "CASA deposits saw healthy growth with current account deposits growing by 29.7 percent over the previous year to reach Rs 74,044 crore and savings account deposits growing by 20.6 percent over the previous year to reach Rs 135,432 crore," it explains.
Profit was estimated at Rs 3,350 crore (20 percent growth) and net interest income at Rs 6,911 crore (21.3 percent growth) for the quarter, according to analysts polled by CNBC-TV18. Other income (non-interest income) during the quarter grew by 13.3 percent to Rs 2,872.2 crore, including fee income & income from sale of investments in Q3.
Operating profit surged 20 percent to Rs 5,735.9 crore compared to same quarter last fiscal. Provisions for bad loans jumped 16.7 percent year-on-year to Rs 653.9 crore in third quarter but fell 4 percent on sequential basis. Asset quality weakened a bit with gross non-performing assets (NPA as percentage of gross advances) rising marginally to 0.97 percent compared to 0.91 percent in preceding quarter but declined compared to 0.99 percent in year-ago period.
Net NPA increased 4 basis points quarter-on-quarter and 3 bps year-on-year to 0.29 percent in quarter gone by.
In absolute terms, gross NPA rose 22.7 percent on yearly basis (up 11.2 percent sequentially) to Rs 4,255.20 crore and net NPA climbed 39.5 percent Y-o-Y and 21.5 percent Q-o-Q to Rs 1,260.60 crore during October-December quarter.
HDFC Bank says total restructured loans were at 0.1 percent of gross advances as of December 2015 against 0.1 percent as of December 2014, adding there was no sale of loans to asset reconstruction companies in Q3. Capital adequacy ratio remained strong at 15.9 percent in Q3 compared to 15.5 percent in preceding quarter and 15.7 percent in year-ago period. Tax expenses during the quarter increased 21 percent to Rs 1,725.1 crore compared to corresponding quarter of last fiscal. At 14:12 hours IST, the scrip of HDFC Bank was quoting at Rs 1,036.70, up Rs 6.40, or 0.62 percent on the BSE.
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