HDFC Bank Q4 profit rises 18%

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Reports 19.4% growth in advances and 17.8 % rise in deposits in Jan-March

Private lender HDFC Bank on Friday reported an 18 per cent rise in net profit for the fourth quarter ended March 31, 2017 at Rs 3,990 crore on account of strong growth in other income and net interest income. The net profit for year ended March 31, 2017 rose by 18 per cent to Rs 14,549.7 crore.

Net interest income (interest earned less interest expended) for the quarter under review grew by 21.5 per cent to Rs 9,055.1 crore

Other income (non-interest revenue) at Rs 3,446.3 crore is a growth of 20.3 per cent over Rs 2,865.9 crore in the corresponding quarter ended March 31, 2016. Provisions and contingencies for the quarter ended rose sharply by over 90 per cent to Rs 1,262 crore, up from Rs 663 crore in the January-March.

Gross non-performing assets (NPAs) were at 1.05 per cent of gross advances against 1.05 per cent December quarter and 0.94 per cent as on March 31, 2016. Net non-performing assets were at 0.3 per cent of net advances as on March 31, 2017.

Of the around Rs 589 crore worth of increase in NPAs, Rs 245 crore were the spillovers due to the additional 60/90 day dispensation allowed by the Reserve Bank of India on account of cash crunch during demonetisation. About 70 per cent of bad loans have slipped from retail while 30 per cent is from the wholesale loans.

“It is a challenging environment and we cannot be completely insulated from it. There were segments that got impacted, especially in the last quarter due to demonetisation which impacted earnings…,” saids Paresh Sukthankar, deputy managing director, HDFC Bank.

Sukthankar said in the near term it is unlikely that policy rates would come down and hence there is not much room to cut lending rates further. “Right now, we are comfortable with the rates. Our base rate and MCLR (marginal cost of funds-based lending rate) are among the lowest in the industry and we have the highest transmission (of monetary policy) in rates in the industry,” he said.

Advances growth picked during the quarter and reported a 19.4 per cent growth. Deposit growth too was strong at 17.8 per cent. CASA ratio continued to strengthen further for the bank and reached 48 per cent for the quarter compared to 45.4 per cent QoQ.

Siddharth Purohit senior research equity analyst at Angel Broking said, “While in absolute terms provisions has gone up by Rs 546 crore, almost half of the incremental provisions can be attributed to the general growth in loan book and standard asset provisions there on. Further Rs 100 crore of these provisions were related to the forbearance used in the previous quarter as per RBI’s notification. So if we look at the provision numbers from qualitative perspective it has been in sync with business growth.”

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