HDFC Bank Q4 profit rises 16 pc to Rs 8,434 cr on high interest income

Total income consolidated increased to Rs 40,909.49 crore for the January-March quarter of FY 2020-21 from Rs 38,287.17 crore in the year-ago period.The banks net interest income during the quarter rose by 12.6 per cent to Rs 17,120.20 crore, driven by a 14 per cent growth in advances and a core net interest margin of 4.2 per cent, the lender said.While the income from non-interest sources or the other income jumped by 25.9 per cent to Rs 7,593.90 crore during the reported quarter.

HDFC Bank on Saturday reported a 15.8 per cent rise in its consolidated net profit to Rs 8,434 crore for the January-March quarter on the back of healthy interest income driven by growth in advances.

The country's largest private sector lender had registered a net profit of Rs 7,280 crore in the corresponding quarter a year ago.

''Consolidated advances grew by 13.6 per cent from Rs 10,43,671 crore as on March 31, 2020, to Rs 11,85,284 crore as on March 31, 2021,'' HDFC Bank said in a regulatory filing.

The consolidated net profit for the year ended March 2021 was Rs 31,833 crore, up 16.8 per cent over the previous fiscal year. Total income (consolidated) increased to Rs 40,909.49 crore for the January-March quarter of FY 2020-21 from Rs 38,287.17 crore in the year-ago period.

The bank's net interest income during the quarter rose by 12.6 per cent to Rs 17,120.20 crore, driven by a 14 per cent growth in advances and a core net interest margin of 4.2 per cent, the lender said.

While the income from non-interest sources or the other income jumped by 25.9 per cent to Rs 7,593.90 crore during the reported quarter. The cost-to-income ratio for the quarter improved to 37.2 per cent as against 39 per cent in the year-ago quarter. However, operating expenses rose by nearly 11 per cent to Rs 9,181.3 crore.

The consolidated income in 2020-21 rose to Rs 1,55,885.28 crore from Rs 1,47,068.28 crore in the preceding year.

On the asset front, the bank's gross non-performing assets as of March 31, 2021, stood at 1.32 per cent of the gross advances, slightly up from 1.26 per cent in the year-ago period. Net NPAs were 0.40 per cent (Rs 4,554.82 crore) as against 0.36 per cent (Rs 3,542.36) in the year-ago period.

Provisions for bad loans and contingencies were higher at Rs 4,693.70 crore for the reported quarter from Rs 3,784.49 crore in the year-ago period.

''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.

The bank held floating provisions of Rs 1,451 crore and contingent provisions of Rs 5,861 as on March 31, 2021. Total provisions (comprising specific, floating, contingent and general provisions) were 153 per cent of the gross non-performing loans as of end-March 2021, it said.

HDFC Bank said its total balance sheet size as of March 2021 has grown by 14.1 per cent year-on-year to Rs 1,746,871 crore.

Total deposits grew by 16.3 per cent to Rs 1,335,060 crore. CASA (current account and savings account) deposits were up by 27 per cent with savings account deposits to Rs 403,500 crore and current account deposits at Rs 212,182 crore. Total advances were up by 14 per cent to Rs 1,132,837 crore.

HDFC Bank has two subsidiaries-- HDFC Securities Ltd (HSL) and HDB Financial Services Ltd (HDBFSL).

HSL, a retail broking firm, registered a net profit of Rs 253.1 crore during March 2021 quarter, up from Rs 157 crore a year ago.

HDBFSL, a non-deposit-taking NBFC, witnessed a decrease in net profit during the quarter to Rs 284.60 crore as against Rs 341.70 crore in the year-ago quarter.

Citing RBI notification of December last year, advising the banks to continue to conserve capital to support the economy and absorb losses in view of the ongoing stress and heightened uncertainty due to Covid, HDFC Bank said it ''did not declare final dividend for the financial year ended March 31, 2020''.

Besides, the board of directors of the bank at its meeting held on April 17, 2021, has considered it prudent to currently not propose any dividend for the financial year ended March 31, 2021.

''The board shall reassess the position based on any further guidelines from the RBI in this regard,'' it added.

HDFC Bank said slowdown during the year led to a decrease in loan originations, the sale of third party products, use of credit and debit cards by customers and the efficiency in collection efforts.

''This may lead to a rise in the number of customer defaults and consequently an increase in provisions thereagainst. The extent to which Covid-19 pandemic, including the current 'second wave' that has significantly increased the number of cases in India, will continue to impact the bank's results will depend on ongoing as well as future developments, which are highly uncertain, including, among other things,'' it said.

With regard to the RBI circular earlier this month about charging interest on interest or the compound interest during the moratorium period of March to August 2020, HDFC Bank said it will refund or adjust it for all borrowers including those who had availed working capital loans.

The Supreme Court in its final order in March this year said that banks could not charge compound interest or penal interest on any amount during the moratorium period in view of the pandemic.

The return of compound interest will be irrespective of whether moratorium had been fully or partially availed, or not availed, said the lender.

HDFC Bank said the methodology for calculation of the amount for such 'interest on interest' is to be finalised by the Indian Banks' Association (IBA) in consultation with other industry participants.

The bank has however estimated the said amount and recognised a charge in its profit and loss account for the year ended March 31, 2021.