HDFC Bank delivered a 20.6 per cent growth in net profit in the March quarter, ending fiscal 2014-15 with a 22 per cent growth in earnings. This was backed by a 20.6 per cent growth in loans. Though loan growth slowed from the previous year’s 26 per cent , the bank has still managed to outpace the industry growth by a wide margin. Over the last two years, as the system growth slipped to lower levels, the margin of HDFC Bank’s outperformance widened, showcasing the bank’s resilience in challenging times. In the past, the bank has been outpacing the industry growth by 6-8 percentage points.

Over the last year, the bank’s loan growth was driven by the corporate segment rather than retail. A larger portion of the bank’s lending to the corporate segment relates to working capital financing. With fresh investments yet to kick in, lending for projects remains muted. The retail space grew 15 per cent for the March quarter (adjusted for reclassification of loans between wholesale and retail) over last year, the fastest in the last four quarters. The sluggish CV cycle that impacted the bank’s loan growth in the retail segment shows some signs of recovery with lending to the segment picking up marginally.

But despite faster growth in corporate loans, the bank’s loan mix is still skewed in favour of the retail segment. This has helped the bank maintain a stable margin performance. HDFC Bank continues to deliver industry-leading net interest margin at 4.4 per cent. Its current account savings account ratio, which had dropped to 40.9 per cent in the December 2014 quarter, bounced back to 44 per cent — similar to last year’s levels. Despite its loan growth holding above the industry, HDFC Bank has been able to maintain its loan delinquency rate. Its gross non-performing asset at 0.93 per cent of loans is lower than that of its peers such as Axis Bank and ICICI Bank.

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