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HDFC Bank PAT grows on other income, asset quality weakens: Key Q3 takeaways

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MUMBAI: Private lender HDFC Bank beat Street estimates by a wide margin when it posted a 32.8 per cent year-on-year (YoY) rise in December quarter profit on Saturday, on the back of higher interest and fee income. The Q3 profit figure came in at Rs 7,416.48 crore, higher than a Rs 7,070 crore estimate analysts had projected in an ET Now poll. Here are the key takeaways from the private lender’s third-quarter earnings:Revenues: The bank’s net revenues increased by 19.1 per cent to Rs 20,842.2 crore for the quarter ended December 2019. Net interest income:Net interest income (interest earned less interest expended) in December quarter grew to Rs 14,172.9 crore from Rs 12,576.8 in the same quarter a year ago.

It was driven by growth in advances of 19.9 per cent, and a growth in deposits of 25.2 per cent.

The net interest margin for the quarter remained stable at 4.2 per cent. Other income: Other income (non-interest revenue) came in at Rs 6,669.3 crore and was 32 per cent of the net revenues for the said quarter.

This was against Rs 4,921.0 crore other income posted in the same quarter a year ago.

The main component of other income – fees and commissions grew by 24.1 per cent to Rs 4,526.8 crore. Asset quality edges lower: Gross non-performing assets (GNPAs) stood at 1.42 per cent of gross advances as on December 31, against 1.38 per cent as on September 30, and 1.38 per cent a year before.

Net non-performing assets (NNPAs) were at 0.48 per cent of net advances for the December quarter.

Total provisions were 119 per cent of the gross non-performing loans as on December 31. Balance sheet: The balance sheet size as of December 31 was at Rs 1,395,336 crore, a growth of 19.4 per cent from a year ago.

Total deposits in Q3FY20 were at Rs 1,067,433 crore, an increase of 25.2 per cent over a year ago. CASA deposits: CASA deposits grew by 21.5 per cent with savings account deposits at Rs 2,77,928 crore and current account deposits at Rs 1,43,900 crore. Loan growth: As per regulatory [Basel 2] segment classification, domestic retail loans grew by 14.1 per cent and domestic wholesale loans grew by 29.3 per cent.

The domestic loan mix as per Basel 2 classification between retail: wholesale was 52:48.

Overseas advances constituted 2 per cent of total advances. Capital Adequacy: The bank’s total Capital Adequacy Ratio (CAR) as per Basel III guidelines was at 18.5 per cent as on December 31 against a regulatory requirement of 11.075 per cent.

Common Equity Tier 1 Capital ratio was at 16.2 per cent in Q3.

Risk-weighted assets were at Rs 9,50,976 crore. Network: As of December 31, the bank’s distribution network was at 5,345 banking outlets and 14,533 ATMs /Cash Deposit - Withdrawal Machines (CDMs) across 2,787 cities.




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