HDFC Bank Q2 net up 20% on healthy loan growth

July-September quarter earnings matched analysts'

July-September quarter earnings matched analysts'

Net interest income (NII) rose by 22 percent to Rs 9,752.1 crore from Rs 7,993.6 crore for the quarter ended September 30, 2016 aided by 17.6 percent growth in average assets and a core net interest margin for the quarter of 4.3 percent.

Speaking after HDFC Bank's September quarter results, deputy managing director Paresh Sukthankar said that while now the bank is seeing growth on the working-capital side, over the next 12-18 months, if demand related to capital expenditure picks up, HDFC Bank will participate in that. The growth was largely driven by higher net interest income, other income and operating profit.

Despite a reduction in the savings deposit rate, NIM declined 10 basis points sequentially as the bank had announced a sharp reduction in interest rates on loans. The bank had fresh additions of Rs 2,473 crore of bad loans during the quarter.

The company has reported EPS of Rs.15.9 for the period ended September 30, 2017 as compared to Rs.13.4 for the period ended September 30, 2016.

Earnings matched analyst expectations.


As a result, provisions and contingencies for the quarter nearly doubled to Rs. 1,476 crore consisting of specific loan loss provisions Rs. 749 crore. Gross non-performing assets were at 1.26% of gross advances as on September 30, as compared with 1.02% a year earlier and 1.24% reported for the June quarter this year.

"The increase in NPA and consequent provision is in conformity with RBIs Annual Risk Based Supervision (RBS) exercise conducted for FY2017 (finalised in October 2017)". During the first quarter of this fiscal, the lender logged Rs 3,893 crore in net profit.

In a regulatory filing, the bank declared that other income increase by 24.3% in the given period.

Gross NPAs stood at Rs7,702.84 crore, up 52% from Rs5,069.04 crore a year ago. Composition of low-priced current account, savings account (CASA) deposits in total deposits improved to 42.9 per cent from 40 per cent in the year-ago quarter.

The bank further said gross NPA divergence as on March 31, 2017 stood at Rs 6,355.2 crore and net NPA divergence at Rs 4,819.4 crore while divergence in provisioning was at Rs 1,536 crore.

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