Private sector lender HDFC Bank reported a 20.1% increase in net profit for the quarter ended September 30 to ₹4,151 crore, despite higher provisioning, on the back of higher interest and fee income.
Net interest income grew 22% to ₹9,752 crore, driven by average asset growth of 17.6% and a core net interest margin of 4.3%. Other income grew 24.3% to ₹3,606 crore.
‘Lower rate impact’
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 lender’s provisions for bad loans almost doubled to ₹1,476 crore, including a general provision of ₹397 crore.
Paresh Sukthankar, deputy MD, HDFC Bank, said that the lender had participated in a project loan under the flexible restructuring scheme and was currently in discussions with the regulator on the status of the loan.
While the loan was still ‘standard’ in the bank’s books, it has made contingent provisions for the account. Much of the general provision was towards this purpose, he said. 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. Net non-performing assets were at 0.4% of net advances as on September 30.
The lender, which saw its employee base decline in the last few quarters, experienced a reversal in trend in the second quarter. According to Mr. Sukthankar, the bank had made a net addition of 2,700 employees in the quarter.
Total deposits stood at ₹6.98 lakh crore, an increase of 16.5% year-on-year. Its current and savings account deposit grew by 23.6% each and the share of Casa deposits was 42.9% of total deposits. The share has fallen from levels in the the post demonetisation period mainly due to lower growth in current account deposits.