The Hindu Business Line : HDFC Bank Q3 net up 31% on retail growth

HDFC Bank has recorded a 31.3 per cent increase in its December 2005 quarter net profit at Rs 224.4 crore, from Rs 170.93 crore in the same quarter last year. The rise in profits was due to the increase in retail advances and other income.

With regard to retail growth, Mr Paresh Sukthankar, Head, Credit and Market Risk, said: "The industry has been growing, but we have seen increase in our market share as well. In most products we are among the top three. Our focus has been to have a good blend of growth in volumes, profitability and market share."

The bank's total income was Rs 1,475.94 crore (Rs 979.55 crore). Net interest income was Rs 670.61 crore (Rs 439.99 crore). Other income was Rs 296.13 crore (Rs 200.52 crore), an increase of 47.7 per cent. Other income comprised fees and commission, foreign exchange and derivatives and profit on sale and revaluation of investment. Total expenditure stood at Rs 958.32 crore (Rs 617.66 crore).

The capital adequacy ratio was 10.3 per cent against 9.4 per cent last year.

The proportion of net non-performing assets to total advances increased to 0.4 per cent from 0.3 per cent last year.

The marginal increase is because of the changing mix of loans, as HDFC Bank has a high share of auto loans, Mr Sukthankar said. But these loans have higher returns, he said.

Total advances stood at Rs 36,156 crore (Rs 23,430 crore).

Retail loans grew 75.6 per cent to Rs 20,659 crore, from around Rs 11,800 crore last year and now form 54.3 per cent of total advances as against 49.1 per cent last year.

Total deposits were Rs 51,195 crore (Rs 37,429 crore). Savings account deposits were at Rs 15,185 crore (Rs 10,876 crore), while current account deposits were at Rs 12,021 crore (10,698 crore). The share of these low cost deposits to total deposits is roughly 56 per cent.

The bank also made higher provisions and contingencies for the quarter were at Rs 293.2 crore (Rs 191 crore). It comprised general and specific loan loss provisions of Rs 138 crore and amortisation of premia (for investments in the Held to Maturity category) of Rs 58.9 crore.

Going ahead, the bank would look at increasing both wholesale business and retail business, though the rate of growth in retail could be higher, Mr Sukthankar said.

About a likely hike in lending rates he said, "If deposit costs look up, it is fair to expect some upward bias in lending rates. But when this will happen is difficult to say."

In September 2005, the bank had filed a shelf registration for raising Tier-II capital up to Rs 1,000 crore. Of this, it has raised around Rs 400 crore and is likely to raise some more in the fourth quarter, Mr Sukthankar said.

On Tuesday HDFC Bank shares ended at Rs 747.95 on the BSE, down 1.22 per cent from the previous day's close of Rs 757.2.

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