HDFC Bank Q1 profit up 20 pc to Rs 6,659 cr on healthy interest income

I Income of the bank rose to Rs 34,453.28 crore in June quarter from Rs 32,361.84 crore in the year-ago same period, HDFC Bank said in a regulatory filing. "Net interest income (interest earned less interest expended) for the quarter ended June 30, 2020 grew by 17.8 per cent to Rs 15,665.4 crore from Rs 13,294.3 crore for the quarter ended June 30, 2019, driven by growth in advances of 20.9 per cent, and a growth in deposits of 24.6 per cent," the Mumbai-based lender said.

HDFC Bank on Saturday reported a nearly 20 per cent rise in standalone net profit at Rs 6,658.62 crore for June quarter, 2020-21 on the back of healthy interest income driven by growth in advances. The country's largest private sector lender clocked a net profit of Rs 5,568.16 crore in the April-June period of 2019-20. I Income of the bank rose to Rs 34,453.28 crore in June quarter from Rs 32,361.84 crore in the year-ago same period, HDFC Bank said in a regulatory filing.

"Net interest income (interest earned less interest expended) for the quarter ended June 30, 2020, grew by 17.8 per cent to Rs 15,665.4 crore from Rs 13,294.3 crore for the quarter ended June 30, 2019, driven by growth in advances of 20.9 per cent, and growth in deposits of 24.6 per cent," the Mumbai-based lender said. The net interest margin for the quarter was 4.3 percent. "The continued slowdown in economic activity has led to a decrease in retail loan origination, sale of third party products, use of credit and debit cards by customers, efficiency in collection efforts and waivers of certain fees. As a result, fees/other income was lower by approximately Rs 2,000 crore," the bank said further.

On the asset quality front, there was an improvement as gross non-performing assets (NPAs) fell to 1.36 percent of the gross advances as on June 30, 2020, from 1.40 percent by the end of June 2019. In value terms, gross NPAs or bad loans were at Rs 13,773.46 crore as against Rs 11,768.95 crore.

Likewise, net NPAs fell to 0.33 percent (Rs 3,279.96 crore) from 0.43 percent (Rs 3,567.18 crore), the bank said in the filing. However, the bank's provisions for bad loans and contingencies for April-June 2020-21 were raised to Rs 3,891.52 crore as against Rs 2,613.66 crore in the year-ago same period.

The bank said the enhanced provisions for the quarter consisted of specific loan loss provisions of Rs 2,739.8 crore and general and other provisions of Rs 1,151.7 crore. Compared to this, the specific loan loss provisions were Rs 2,248 crore and general, and other provisions were at Rs 365.7 crore for the year-ago same quarter. "Total provisions for the current quarter included contingent provisions of approximately Rs 1,000 crore," HDFC Bank said.

Among others, the total deposits of the bank as of June 30, 2020, grew by 24.6 percent to Rs 11.89 lakh crore. CASA (current account savings account) deposits grew by 26 percent with savings account deposits at Rs 3.27 lakh crore and current account deposits at Rs 1.50 lakh crore. The bank's continued focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 140 percent, well above the regulatory requirement, it added.

Total advances as of June 30, 2020, were Rs 10.03 lakh crore, an increase of 20.9 percent year-on-year. The domestic advances grew by 21 percent, of which retail advances were up by 7.2 percent and wholesale loans grew by 37.6 percent. The private sector lender said its total capital adequacy ratio (CAR) as per Basel III guidelines was higher at 18.9 percent than the regulatory requirement of 11.075 percent.

Further, the lender said that during the June quarter, it used its analytical models to determine slippages, resulting in a more expedited recognition of NPAs, as well as accelerated corresponding specific provisions. The bank also continues to hold provisions as on June 30, 2020, 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, it said. On a consolidated basis, the bank reported a rise of 22 per cent in net profit at Rs 6,927.24 crore for the quarter under review from Rs 5,676.06 crore in the year-ago same period.

Income (consolidated) rose to Rs 36,698.59 crore from Rs 34,324.45 crore. The consolidated results of the bank comprise earnings from its retail broking firm HDFC Securities Ltd (HSL) and HDB Financial Services Ltd (HDBFSL), which is a non-deposit taking non-banking finance company engaged in providing loans and asset finance products to individuals, emerging businesses and micro-enterprises. HDFC Bank has a 96.5 percent stake in HSL and 95.3 percent in HDBFSL.