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HDFC Bank’s provisions rise 23%: Key takeaways from Q2 earnings

NEW DELHI: Private lender HDFC Bank on Saturday announced a ..

NEW DELHI: Private lender HDFC Bank on Saturday announced a 20.6 per cent year-on-year (YoY) jump in September quarter net profit at Rs 5,005.70 crore. The numbers came largely in line with analyst projections. The bank said net interest income (NII), which is the difference between the interest income a bank earns from its lending activities and the interest it pays to depositors, rose 20.60 per cent to Rs 11,763.40 crore against Rs 9,752.1 crore reported for the same quarter last year.

Here are key takeaways from the Q2 earnings .

Asset quality stable
Gross non-performing assets jumped to Rs 10,09,773 crore in September quarter from Rs 9,53,862 crore reported for June quarter and Rs 7,70,284 crore in the year-ago quarter. However, gross NPAs as a percentage of gross advances stood at 1.33 per cent, the same as it was in June quarter. Gross NPA for the bank stood at 1.26 per cent in the year-ago quarter. The bank said total provisions, which included specific provisions, general provisions and floating provisions, accounted for 117 per cent of gross non-performing loans at the end of second quarter. Coverage ratio, the bank said, stood at 70 per cent.

23% jump in provisions
Provisions and contingencies for the quarter rose 23 per cent to Rs 1,820 crore. They included specific loan loss provisions of Rs 1,572.50 crore and general provisions and other provisions Rs 247.5 crore). The bank had made Rs 1,476.20 crore provisions for the year-ago quarter.

NIM remains flat YoY
Net interest margin (NIM), which is the difference between interest income earned and interest paid by the bank relative to its interest-earning assets like cash, came in at 4.3 per cent against 4.2 per cent reported for the June quarter and 4.3 per cent in the year-ago quarter.

Other incomes climb 11%
Other incomes, which included non-fund-based banking activities including commission, fees, earnings from foreign exchange and derivative transactions, profit and loss (including revaluation) from investments and recoveries from accounts previously written off rose 11.2 per cent for the quarter to Rs 4,015.60 crore. About 82.1 per cent of this accounted for fees and commission (Rs 3,295.60 crore).

Loan growth at 24%
Total advances for the quarter stood at Rs 7,50,838 crore, up 24.2 per cent on year-on-year basis. Domestic retail loans grew 23.8 per cent YoY while wholesale loans rose 24.7 per cent . The domestic loan mix between retail and wholesale stood at 55:45 per Basel II classification. Overseas advances constituted 3 per cent of total advances, the bank said in a BSE filing.

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