Packing batteries with more punch
Indian researchers are working on cells that can store more energy, last longer
For HDFC Bank, retail loans have been a key driver of growth in the previous two fiscal years. File photo - THE HINDU
BL Research Bureau
After delivering sub-20 per cent loan growth in the previous two fiscals, HDFC Bank managed a higher 24 per cent loan growth in the FY19 fiscal. But the bank’s retail loan portfolio that had been driving growth over the past two years, has seen a considerable slowdown in growth, owing to the underlying weakness in the four/two wheeler segments. Nonetheless, backed by strong uptick in corporate loan growth, a stable net interest margin, improving cost to income ratio, and healthy growth in fee income, earnings for the bank has grown at a steady 20.5 per cent year-on-year (YoY) in FY19.
Corporate loans drive growth
For HDFC Bank, retail loans have been a key driver of growth in the previous two fiscal years. But significant slowdown in growth across most segments---in particular auto, two wheeler, business banking and Kisan Gold Cards—has impacted retail loan growth in FY19.
After reporting a robust 27 per cent growth in FY16, overall loan growth moderated to 18-19 per cent levels in FY17 and FY18. Lower traction in corporate loans in FY17, had impacted loan growth--- in particular, in the December 2016 quarter HDFC Bank’s corporate loan growth was impacted by the unwinding of the leveraged product the bank offered under the FCNR deposit scheme as well as repayment of some of the working capital loans by SMEs, post demonetisation. While normalisation of some of these events, helped corporate loan pick up in the March 2017 quarter, loan growth for the full fiscal (FY17) had moderated to 19 per cent.
Read: HDFC Bank Q4 net profit up 23 per cent at Rs 5,885 crore
In FY18, corporate loans grew by a more modest 9 per cent. That said, growth in retail loans in FY17 and FY18 continued on a strong wicket, driving the overall growth for the bank.
In FY19, while retail loan growth has moderated, notable pick up in corporate loan growth has helped deliver a strong overall loan growth of 24 per cent. As a result retail loans now constitute 54 per cent of the overall loan portfolio (from 57 per cent in FY18).
While net interest margins have remained stable at 4.2-4.3 per cent, a drop in cost to income ratio and strong fee income growth have boosted the core performance of the bank in FY19.
Bad loans marginally up
Since FY17, gross non-performing assets (GNPAs) for the bank, in absolute terms, has been growing 30-40 per cent YoY. However a healthy growth in loans has kept delinquency ratio (GNPA as a per cent of loans) at bay. But the bank has been facing stress in its Agri portfolio, which may need a watch. That said, a higher provision coverage ratio of 71 per cent (floating provisions of Rs 1451 crore) mitigate risk. HDFC Bank’s GNPAs that had been hovering around the 1 per cent mark, in the past, has inched up slightly over the past one year. In the latest March quarter, the bank’s GNPA stood at 1.36 per cent of loans.
Indian researchers are working on cells that can store more energy, last longer
To fix a broken bone, doctors often harvest another bone from the patient’s body or from someone else. It ...
Superconductors from IIScScientists at IISc Bangalore have invented a device with a nanocrystal structure ...
Engineering and construction giant L&T has won a licence from the Council of Scientific & Industrial ...
The fund delivered a return of 31.5% in 2020 compared with the category’s 15.5%
Care Health Insurance’s new rider offers no great benefit. We review its pros and cons
Ensure that the investment thesis based on which you bought the IPO still holds good
Here are some yardstick for selecting auto component stocks
India is ready with two vaccines to beat the deadliest virus of recent times. The immunisation drive, however, ...
The storming of the Capitol on January 6 could be the prelude to yet another chapter in the US’s long and ...
‘Now It’s Come to Distances’ examines the defining moments of the past year — the Shaheen Bagh protests, ...
Legal and regulatory uncertainties hang like a sword on an industry which earned ₹2,470 crore revenues in the ...
Digital is becoming dominant media, but are companies and their ad agencies transforming fast enough to make a ...
Slow Network, promoted by journalist-lyricist Neelesh Misra, pushes rural products and experiences
How marketers can use the traditional exchange of festive wishes meaningfully
For Fortune, a brand celebrating its 20th anniversary, it was a rude shock to become the butt of social media ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor