HDFC Bank’s asset quality improved in the December quarter with gross bad loan ratio or the percentage of bad loans to total advances declining 61 bps y-o-y to 0.81%
Mumbai: Private sector lender HDFC Bank on Saturday reported a 18% year-on-year (y-o-y) rise in net profit to ₹8,758.29 crore for the three months to December owing to higher net interest income and other income.
Its profit was higher than ₹7,818 crore estimated by a Bloomberg poll of 15 analysts.
The bank’s net interest income -- difference between interest earned and interested expended – grew 15.1% y-o-y to ₹16.317.6 crore. Its net interest margin -- a key measure of profitability -- stood at 4.2%. HDFC Bank’s other income rose 11.6% y-o-y to ₹7,443 crore.
The Supreme Court on 3 September ordered an interim stay on classifying bad loans if not declared so by 31 August and banks are expected to use this relaxation till the final orders are passed.
Without taking that into account, HDFC Bank’s asset quality improved in the December quarter with gross bad loan ratio or the percentage of bad loans to total advances declining 61 bps y-o-y to 0.81%. Its net NPA ratio was also down 39 bps y-o-y to 0.09% in Q3 FY21. Even compared to the September quarter of FY21, HDFC Bank’s gross bad loan ratio showed improvement.
However, if the bank had classified borrower accounts as non-performing after 31 August 2020, its proforma gross NPA ratio and proforma net NPA ratio would have been 1.38% and 0.4%, respectively. The bank said it has recast around 0.5% of its total loans under Reserve Bank of India’s (RBI) covid-19 relief programme.
Its provisions rose 12% to ₹3,414 crore and it said that total provisions for the current quarter includes contingent provisions of approximately ₹2,400 crore for proforma NPAs.
The bank’s total advances were at ₹10.82 trillion in Q3 of FY21, an increase of 15.6% over the same period last year. The domestic retail loans grew 5.2% and domestic wholesale loans grew 25.5%, it said, adding that the domestic loan mix between retail and wholesale was 48:52. Overseas advances constituted 3% of total advances, the bank said.
Total deposits stood at ₹12.71 trillion, an increase of 19.1% over a year ago. Its current and savings account (CASA) deposits grew 29.6% with savings account deposits at ₹3.74 trillion and current account deposits at ₹1.72 trillion. The bank said its CASA deposits now comprise 43% of total deposits as of 31 December 2020.
HDFC Bank’s total capital adequacy ratio (CAR) as per Basel III guidelines was at 18.9% as on 31 December, as against a regulatory requirement of 11.075%, including the capital conservation buffer of 1.875%, and an additional requirement of 0.20% for being a Domestic Systemically Important Bank (D-SIB).
The lender's non-banking financier subsidiary HDB Financial Services reported a net loss of ₹44.3 crore in Q3 FY21, owing to higher provisions. It had reported a net profit of ₹216.7 crore in Q3 of FY20.
Provisions and contingencies at the non-banking financial company (NBFC) for the quarter were at ₹818.8 crore, while its operating profit was at 748.7 crore in the December quarter. As on 31 December, gross and net NPA of the NBFC stood at 2.7% of gross advances and 1.7% of net advances, respectively. Had it not been for the Supreme Court order cited above, gross NPA ratio would have been 5.9%.
Shares of HDFC Bank closed at ₹1,466.35 on the BSE on Friday, down 0.12% from its previous close.