In the March quarter, HDFC Bank Ltd continued to shrink its customer assets. Total customer assets, (which includes advances, corporate debentures, investment in securitized paper), fell to Rs100,436 crore, compared with Rs100,682 crore at the end of December. On the liabilities side, the bank’s deposits fell from Rs144,862 crore at end-December to Rs142,812 crore. And while the bank’s balance sheet size didn’t shrink during the quarter, it didn’t go up much either.
Also See Steady Gain (Graphic)
HDFC Bank’s results for the March quarter are for the merged entity including the former Centurion Bank, while the results for the year ago period are for HDFC Bank prior to the merger, which makes them not comparable. A better option would be to contrast the y-o-y growth in the December numbers, which also include Centurion Bank of Punjab, with the y-o-y growth in the March quarter.
Net profit growth during January-March over the year ago period was 33.9%, compared with 44.8% growth in the December quarter. Growth in net interest income was a mere 12.8%, much lower than the growth in the previous quarter. Although the proportion of low-cost current and savings accounts improved, net interest margin fell to 4.2%, compared with 4.3% in the December quarter. But the main reason for a lower growth in net interest income was a much lower asset growth. In the March quarter, average asset growth (y-o-y) was 29%, against a y-o-y growth of 44.1% in the December quarter. Strong growth in non-interest income, especially in fee income, made amends. Operating costs were also kept in check, being 47.1% of net revenues in the March quarter compared with 50% in the December quarter.
Gross non-performing assets (NPA) increased by Rs77 crore in the March quarter, much lower than in the December quarter. The good news is that total restructured assets were just Rs120 crore at the end of March and even the restructured proposals pending add up to another Rs305 crore. The bank has been able to keep its net NPAs at 0.6%. That is commendable and an endorsement of the bank’s strategy of making haste slowly in the current environment. That’s reflected in the bank’s stock, which has outperformed the BSE Bankex this year.
Graphics by Ahmed Raza Khan/Mint
Write to us at firstname.lastname@example.org