| HDFC Bank has posted 18% growthin net profit to Rs 6658.62 crore in the quarter ended September 2020 (Q2FY2021), driven byhealthy growth in interest income, surge in trading income, decline in decline in cost-to-income ratio and sharply lower tax rate. The core fee income of the bank has declined in Q2FY21 over a year ago level, but improved substantially on sequential basis. However, the provisions for the bank jumped 37% in Q2FY2021 due to accelerated provisioning.
The bank has witnessed moderation in business growth driven by deceleration deposits as well as advances growth, but the growth still remained much above the banking sector growth end September 2020.
The Net Interest Margins (NIMs) of the bank eased to 4.1% in Q2FY2021, mainly driven by excess liquidity. The bank has exhibited improvement in CASA deposits ratioto41.6% end September 2020.
The advances growth of the bank eased on sequential basis to 16% end September 2020, due to moderation in the retail loan growth to 5%, while the corporate loan growth was robust at 27% end September 2020.
The bank is well positioned to deal with likely asset quality stress in the post moratorium with strong balance sheet, robust providing, healthy loan growth, asset quality way better than peer banks.
Asset quality improves: The bank has maintained stable asset quality with the decline in net NPA ratio in the quarter ended September 2020.
GNPA ratio declined to 1.08% of gross advances and NNPA ratio dipped to 0.17% of net advances end September 2020.
Supreme Court has directed that accounts which were not declared NPA till 31 August 2020 shall not be declared as such until further orders.
However, if the Bank had classified borrower accounts as NPA and also adopted an early recognition of NPA using its analytical models, Gross NPA ratio would have been 1.37% end September 2020 from 1.36% a quarter ago and 1.38% a year ago.
Net NPA ratio would have been 0.35%.
Pending disposal of the case, the Bank, as a matter of prudence, has made a contingent provision in respect of these accounts and also continues to hold provisions against the potential impact of COVID-19 based.
The Bank held floating provisions of Rs 1451 crore and contingent provisions of Rs 6304 crore end September 2020. Total provisions (comprising specific, floating, contingent and general provisions) were 195% of the reported Gross NPAs and 154% including unclassified NPAs end September 2020.
CRAR stands at 19.1% with Tier 1 CAR at 17.7% end September 2020. Common Equity Tier 1 Capital ratio was at 17.0%.
Risk weighted Assets increased 8% to Rs 1037483 crore end September as against Rs 963321 crore end September 2019.
| Asset Quality Indicators: HDFC Bank |
|
Sep-20 |
Jun-20 |
Mar-20 |
Dec-19 |
Sep-19 |
Variation |
| QoQ |
YTD |
YoY |
| Gross NPA (Rs Crore) |
11304.60 |
13773.46 |
12649.97 |
13427.25 |
12508.15 |
-18 |
-11 |
-10 |
| Net NPA (Rs Crore) |
1756.08 |
3279.96 |
3542.36 |
4468.35 |
3790.95 |
-46 |
-50 |
-54 |
| % Gross NPA |
1.08 |
1.36 |
1.26 |
1.42 |
1.38 |
-28 |
-18 |
-30 |
| % Net NPA |
0.17 |
0.33 |
0.36 |
0.48 |
0.42 |
-16 |
-19 |
-25 |
| % PCR |
84.00 |
76.00 |
72.00 |
67.00 |
70.00 |
800 |
1200 |
1400 |
| % CRAR - Basel III |
19.10 |
18.90 |
18.50 |
18.50 |
17.50 |
20 |
60 |
160 |
| % CRAR - Tier I - Basel III |
17.70 |
17.50 |
17.20 |
17.10 |
16.20 |
20 |
50 |
150 |
| Variation in basis points for figures given in percentages and in % for figures in Rs crore |
Business highlights
The balance sheet size of the bank increased at steady pace of 21% to Rs 1609428 crore end September 2020 from Rs 1325072 crore end September 2019.
Deposits increased 20% to Rs 1229310 crore, while CASA deposits grew by 28% and CASA ratio moved up to 41.6% end September 2020. Time deposits an increased 167%.
Advances moved up 16% to Rs 1038335 crore end September 2020. Domestic advances grew by 15%. Domestic retail loans grew by 5% and domestic wholesale loans grew by 27%. The domestic loan mix between retail:wholesale was 48:52. Overseas advances constituted 3% of total advances.
The Bank's distribution network was at 5430 branches and 15292 ATMs / Cash Deposit & Withdrawal Machines (CDMs) across 2,848 cities / towns end September 2020. About 50% of branches are in semi-urban and rural areas.
In addition, the bank has 12141 business correspondents, of which 99% are manned by Common Service Centres (CSC) as against 181 business correspondents end September 2019.
Number of employees increased to 117082 end September 2020 from 111,208 end September 2019.
Quarterly performance
Net interest income increased 17% to Rs 15776.4 crore, driven by asset growth of 21% and nearly stable core net interest margin of 4.1%.
Other income rose 9% to Rs 6092.5 crore, driven by more than two-fold jump in treasury income to Rs 1016.2 crore, forex income rose 2% to Rs 560.4 crore and miscellaneous income increased 15% to Rs 576.60 crore. However, the core fee income eased 3% to Rs 3940.3 crore in Q2FY2021.
The operating expenses increased 9% to Rs 8055.1 crore in Q2FY2021. The cost-to-income ratio for the quarter was at 36.8% as against 38.8% for the corresponding quarter ended September 2019. Growth in operating expenses was relatively moderate, as a result of lower loan origination and sales volumes.
The operating profit increased Rs 13813.8 crore.
Provisions moved up 37% to Rs 3703.5 crore, as other provisions moved up 274% to Rs 2463.0 crore, while loan loss provisions declined 39% to Rs 1241 crore in Q2FY2021.
Total provisions for the current quarter includes contingent provisions of approximately Rs 2300 crore for unclassified NPAs of Q2FY2021.
Book Value per share stood at Rs 338.2 per share at end September 2020, while adjusted Book value (adjusting for NNPA) was at Rs 335.0 per share at end September 2020.
Financial performance H1FY2021
For the half year ended September 2020 (H1FY2021), the net interest income of the bank has increased 17%, while non-interest income declined 4%. The operating expenses rose 3%, while provisions jumped 43% in Q2FY2021. The tax provisions declined 13%, while net profit moved up 9% in H1FUY021.
Subsidiaries
HDFC Securities posted growth in the total income to Rs 341.4 crore as against Rs 189.3 crore for the quarter ended September 2019. Profit after tax for the quarter was Rs 167.1 crore, as against Rs 91.0 crore for the quarter ended September 2019. As on September 30, 2020, HSL had 235 branches across 161 cities / towns in the country.
HDB Financial Services (HDBFSL) (95.3% stake in HDBFSL.) recorded 2% growth in the the total loan book to Rs 57,014 crore. HDBFSL increased its liquidity buffers, with Liquidity Coverage Ratio now at a healthy 214%. The net profit declined to Rs 29.9 crore compared to Rs 213.0 crore in the previous quarter. The GNPA ratio stood at 4.3% and NNPA at 3.1%. CAR was at 19.6% with Tier-I CAR at 14.6%., HDBFSL had 1,342 branches across 986 cities / towns.
Consolidated Financial Results
The consolidated net profit increased 16% to Rs 7703 crore for the quarter ended September 2020. Consolidated advances grew by 15% from Rs 947440 crore end September 2019 to Rs 1088948 crore end September 2020. The consolidated net profit for H1FY2021, moved up 19% to Rs 14630 crore. |