HDFC Bank, country’s second largest private sector lender, reported a 20 per cent rise in net profit in the second quarter ending September, 2014 at ₹2,381.5 crore.

This is the fifth consecutive quarter that the bank has posted net profit that is below its trend growth rate of 30 per cent.

Provisions and contingencies increased 18 per cent to ₹456 crore (consisting of specific loan loss and general provisions) for the quarter under review from ₹386 crore in the same quarter last year. It also provided for tax expense of ₹1,223 crore before profit.

Net interest income (difference between interest earned and interest expended) grew by 23 per cent to ₹5,511 crore. Other income grew by 11 per cent at ₹2,047 crore as against ₹1,844 crore in the corresponding quarter ended September 30, 2013.

“We saw pick up in retail disbursements, which grew over 20 per cent, especially in car loans and personal loans. Commercial vehicles and equipment also saw a growth of 10 per cent, turning positive from flat or negligible growth a year ago,” said Paresh Sukthankar, Deputy Managing Director at HDFC Bank.

Improved margins

Margins improved to 4.5 per cent due to slightly better deposit mix of current and savings deposit. “Right now, we are comfortably placed on liquidity and there is no compulsion to change interest rates,” Sukthankar added.

Performance

As of September 30, total advances increased 22 per cent. Domestic retail and wholesale loans grew 17 per cent and 22 per cent, respectively.

Gross non-performing assets (NPAs) improved at 1.02 per cent of gross advances as on September 30, 2014, as against 1.09 per cent as on September 30, 2013.

Total restructured loans declined to 0.1 per cent of gross advances as of September 30, as against 0.2 per cent last year.

“Capital expenditure loan demand is still a couple of quarters away. Corporate lending has seen pressure as corporates are borrowing from other avenues like commercial paper. So, to that extent banks are getting lower business from them,” the Deputy MD said.

After declining marginally post-results, HDFC Bank shares ended almost flat at ₹895.90 a share, up by 0.12 per cent over the previous close on the Bombay Stock Exchange.

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