Private lender HDFC Bank on Tuesday reported a 15 percent rise in third-quarter net profit to Rs 3,865.3 crore on the back of higher interest and fee income.
Net interest income (interest earned less interest expended) for the quarter ended December 31, 2016 grew 17.6 per cent to Rs 8,309.1 crore, from Rs 7,068.5 crore for the same quarter of last year driven by average assets growth of 18.6 per centand a net interest margin for the quarter of 4.1 per cent.
HDFC Bank continued to report lower bad loans than its peers. Its gross non-performing assets (NPAs) were at 1.05 per cent of gross advances as on December 31 as against 1.02 per cent as on September 30, 2016 and 0.97 per cent as on December 31, 2015. Net non-performing assets were at 0.3 per cent of net advances as on December 31, 2016.
CASA deposit growth saw a spurt, largely attributable to the demonetisation exercise, with current account deposits growing by 36.7 per cent over the previous year to reach Rs 1.01 lakh crore and savings account deposits growing by 37.8 per cent over the previous year to reach Rs 1.86 lakh crore. Total advances as of December 31, 2016 were Rs 4.95 lakh crore after considering repayments of about $2 billion of overseas loans linked to FCNR deposits. The bank’s domestic loan portfolio of Rs 4.77 lakh crore grew at 17.5 per cent on a year on year basis.
Siddharth Purohit, senior equity research analyst-banking at AngelBroking, said, “HDFC Banks’s results for the quarter were broadly in line with expectations. While PAT growth of 15 per cent looks lower when compared to the historical trend of HDFC Bank. Given the slow down due to demonetisation the results by HDFC can be considered decent enough.”
“NIM further contracted by 10 bps QoQ to 4.1 per cent, but we feel NIM should be stabilise from here onwards. What is worth noting is that in this quarter again HDFC Bank has been able to maintain a stable set of asset quality and we don’t see this worsening in the near term. At the CMP the stock trades at 3.3x its FY18 estimated adjusted book value and we have an Accumulate rating on the stock,” added Purohit.
PTI adds: The bank’s deputy managing director Paresh Sukthankar acknowledged this is the slowest profit growth ever for over two decade-old bank but defended it, saying this is because of the external environment, and declined to give any guidance on how it sees the next few quarters.
He, however, said the bank will continue to outgrow the system, and gave out data on both deposits and advances growth where it has achieved this.
The Mumbai-headquartered lender, which had made a name for itself by consistently delivering 30 per cent profit growth for more than 32 quarters without a break till about two years ago, and then slipped to the 20 per cent levels with sluggish economic growth, saw its et interest margins narrowing by 10 bps to 4.10 per cent during the December quarter.
Sukthankar said the bank lost out on "fairly meaningful" quantum of fees from point of sale terminals and ATM usage during the demonetisation exercise (Nov 9-Dec 30). He made a plea for a "balance" to be achieved on the merchant discount rates so that those investing in the infrastructure also benefit.
Net interest income (interest earned less interest expended) for the quarter ended December 31, 2016 grew 17.6 per cent to Rs 8,309.1 crore, from Rs 7,068.5 crore for the same quarter of last year driven by average assets growth of 18.6 per centand a net interest margin for the quarter of 4.1 per cent.
HDFC Bank continued to report lower bad loans than its peers. Its gross non-performing assets (NPAs) were at 1.05 per cent of gross advances as on December 31 as against 1.02 per cent as on September 30, 2016 and 0.97 per cent as on December 31, 2015. Net non-performing assets were at 0.3 per cent of net advances as on December 31, 2016.
CASA deposit growth saw a spurt, largely attributable to the demonetisation exercise, with current account deposits growing by 36.7 per cent over the previous year to reach Rs 1.01 lakh crore and savings account deposits growing by 37.8 per cent over the previous year to reach Rs 1.86 lakh crore. Total advances as of December 31, 2016 were Rs 4.95 lakh crore after considering repayments of about $2 billion of overseas loans linked to FCNR deposits. The bank’s domestic loan portfolio of Rs 4.77 lakh crore grew at 17.5 per cent on a year on year basis.
Siddharth Purohit, senior equity research analyst-banking at AngelBroking, said, “HDFC Banks’s results for the quarter were broadly in line with expectations. While PAT growth of 15 per cent looks lower when compared to the historical trend of HDFC Bank. Given the slow down due to demonetisation the results by HDFC can be considered decent enough.”
“NIM further contracted by 10 bps QoQ to 4.1 per cent, but we feel NIM should be stabilise from here onwards. What is worth noting is that in this quarter again HDFC Bank has been able to maintain a stable set of asset quality and we don’t see this worsening in the near term. At the CMP the stock trades at 3.3x its FY18 estimated adjusted book value and we have an Accumulate rating on the stock,” added Purohit.
PTI adds: The bank’s deputy managing director Paresh Sukthankar acknowledged this is the slowest profit growth ever for over two decade-old bank but defended it, saying this is because of the external environment, and declined to give any guidance on how it sees the next few quarters.
He, however, said the bank will continue to outgrow the system, and gave out data on both deposits and advances growth where it has achieved this.
The Mumbai-headquartered lender, which had made a name for itself by consistently delivering 30 per cent profit growth for more than 32 quarters without a break till about two years ago, and then slipped to the 20 per cent levels with sluggish economic growth, saw its et interest margins narrowing by 10 bps to 4.10 per cent during the December quarter.
Sukthankar said the bank lost out on "fairly meaningful" quantum of fees from point of sale terminals and ATM usage during the demonetisation exercise (Nov 9-Dec 30). He made a plea for a "balance" to be achieved on the merchant discount rates so that those investing in the infrastructure also benefit.
