HDFC Bank reports 18.4 per cent increase in Q2 net profit

Private sector lender HDFC Bank reported an 18.4 per cent increase in its standalone net profit for the second quarter of the fiscal at ₹7,513.11 crore as against ₹6,344.99 crore a year ago.

For the quarter ended September 30, 2020, the bank’s total income grew by 6.9 per cent at ₹36,069.42 crore compared to ₹33,755 crore a year ago.

Net interest income for the second quarter this fiscal grew by 16.7 per cent to ₹ 15,776.4 crore from ₹13,515.0 crore for the quarter ended September 30, 2019.

In a statement on Saturday, HDFC Bank said this was “driven by asset growth of 21.5 per cent and a core net interest margin for the quarter of 4.1 per cent”.

Other income grew by nine per cent to ₹6,092.45 crore in the quarter under review.

HDFC Bank said that though the first quarter of the fiscal largely bore the brunt of the Covid-19 pandemic, some of the softness continued into the second quarter, which led to lower retail loan origination, use of debit and credit cards by customers, efficiency in collection efforts and waivers of certain fees.

“As a result, fees and other income were lower by approximately ₹00 crore,” it said, adding that the loan and card momentum has improved over the previous quarter, thereby reducing the gap to less than half.

The bank’s provisions and contingencies increased by 37 per cent in the second quarter of the fiscal to ₹3,703.50 crore versus to ₹2,700.68 crore a year ago.

Total provisions for the current quarter includes contingent provisions of approximately ₹2,300 crore for proforma NPA as described in the asset quality section below as well as additional contingent provisions to make the balance sheet more resilient, the bank further said.

The gross and net non-performing assets were at 1.08 per cent of gross advances and 0.17 per cent of net advances as on September 30, 2020 respectively.

It further said that if it had classified borrower accounts as NPA after August 31, 2020 and also adopted an early recognition of NPA using its analytical models (proforma approach), the proforma gross NPA ratio would have been 1.37 per cent as on September 30, 2020, as against 1.36 per cent as on June 30, 2020 and 1.38 per cent as on September 30, 2019. Its proforma net NPA ratio would have been 0.35 per cent.

“Pending disposal of the case (in the Supreme Court), the bank, as a matter of prudence, has made a contingent provision in respect of these accounts,” it said.

Total balance sheet size as of September 30, 2020 was ₹1,609,428 crore as against ₹1,325,072 crore as of September 30, 2019, a growth of 21.5 per cent.