HDFC Bank Q4 net up 18 per cent at ₹6,928 cr

Private sector lender HDFC Bank has posted 17.7 per cent increase in net for the fourth quarter of fiscal year 2019-20 and said that the extent to which the Covid-19 pandemic will impact its results in the future is still not certain.

The lender’s net profit stood at ₹6,927.7 crore as on March 31, 2020 as against Rs 5,885.12 crore a year ago. On a quarterly basis, however, its net profit was higher at Rs 7,416.48 crore as on December 31, 2019.

For the full financial year 2019-20, net profit surged by 24.6 per cent to ₹ 26,257.3 crore from Rs 21,078.14 crore in 2018-19.

“The extent to which the Covid19 pandemic will impact the bank’s results will depend on future developments which are highly uncertain, including among other things, any new information concerning the severity of the pandemic and any action to contain its spread or mitigate its impact…,” it said in the results.

Net revenues (net interest income plus other income) increased by 18.2 per cent to ₹21,236.6 crore for the quarter ended March 31, 2020 from a year ago.

Net interest income for the fourth quarter grew by a robust 16.1 per cent to ₹ 15,204.1 crore, from ₹13,089.5 crore a year ago. “This was driven by growth in advances of 21.3 per cent, and a growth in deposits of 24.3 per cent,” HDFC Bank said in a statement on Saturday.

The net interest margin for the quarter was at 4.3 per cent.

Other income (non-interest revenue) amounted to ₹6,032.6 crore as on March 31, 2020, totalling 28.4 per cent of net revenues for the quarter as against ₹4,871.2 crore a year ago.

“During the quarter, there was a considerable slowdown in economic activities following the outbreak of COVID-19. Furthermore, with the government initiating lockdown in the latter half of March, and our strict adherence to social distancing, not only did we see an impact on business volumes - in terms of loan originations, distribution of third-party products, and payments product activities, we also could not optimise our collection efforts, as a result of which fees and other income were lower by ₹450 crore,” it further said.

Other income was higher at Rs 6,669.28 crore at the end of the third quarter. The bank’s asset quality was stable during the quarter.

Provisions and contingencies for the quarter ended March 31, 2020, however, doubled to ₹3,784.5 crore, as against ₹ 1,889.2 crore a year ago.

The bank said total provisions for the current quarter included credit reserves relating to COVID-19 in the form of contingent provisions of approximately ₹1,550 crore.

Its gross non-performing assets amounted to Rs 12,649.97 crore as on March 31, 2020, or 1.26 per cent of gross advances as on March 31, 2020 as against 1.36 per cent a year ago.

Net NPAs amounted to 0.36 per cent of net advances as on March 31, 2020, as against 0.39 per cent a year ago.

According to a Reserve Bank of India circular, the bank’s board at its meeting did not propose any final dividend for 2019-20.

S&P affirmed ratings

Meanwhile, global rating agency Standard and Poor’s had on Friday affirmed HDFC Bank’s issuer credit rating at BBB-/Stable/A-3 and senior unsecured at BBB-.

“The stable outlook on HDFC Bank reflects our view that the bank will maintain its strong market position and favourable funding and liquidity metrics over the next 24 months,” it said, adding that the rating is capped by its sovereign credit rating on India.

It could lower its rating on the bank if it downgrades India. “We will lower our assessment of the bank's SACP if the deteriorating operating environment in India leads to sharp rise in NPLs and credit costs for the bank,” it further said.

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