HDFC Bank, which announced its December quarter numbers on Saturday, has logged a set of healthy numbers, maintaining its past performance record. The bank has posted a 20 percent rise in its net profit of Rs 2,795 crore supported by growth in its loan book and good control on loan impairments.
The gross non-performing assets (NPAs) of the bank declined to 0.99 percent of gross advances from 1.02 percent in the preceding month and 1.01 percent in the year-ago period. This is possibly among the lowest bad loan levels among larger banks.
Total provisions made by the bank, during the quarter, rose to Rs560.4 crore, compared with Rs388.8 crore in the year ago quarter. The net interest income, the difference between interest earned and expended, grew by 23 percent to Rs5,699.9 crore from Rs4,634.8 crore in the year-ago quarter.
Reuters
HDFC bank’s loan book has grown 17 percent on a year-on-year basis. In the past, the bank had enhanced its focus on the retail loan book, which now constitutes more than half of the overall advances. This is a strategy, which most private banks have adopted in the face of lackluster demand from corporations in a slowing economy.
The lender has managed to grow its auto, home loan portfolios in a healthy manner, even though there is a decline in the commercial vehicle segment, possibly due to poor demand in a sluggish economy.
Largely, if one goes by the indications from HDFC Bank and other leading private lenders, there is no visible pick up in the corporate loan demand yet. A reversal in this trend can take a few more quarters till the economic recovery takes firm hold on the ground, regardless of what the rebased Gross Domestic Product (GDP) numbers indicate.
The December quarter had witnessed further pain on the bad loan levels of most banks. Even ICICI Bank, which typically escapes unhurt during the downturns, reported a lower than expected net profit of Rs 2,889 crore in the three months ended 31 December, on account of a clear build up of stress on its books.
ICICI Bank’s gross non-performing assets (NPAs), during the quarter, has risen to Rs 13.082 crore from Rs 11,547 crore in the preceding quarter and Rs 10,399 crore in the corresponding quarter last year, most of which emerged from corporate loan. The same is the case with most state-run banks, which saw the NPA levels rising sharply.
Among the few exceptions to this trend among state-run banks, was State Bank of India (SBI), which reported a stable level of bad loans.
Gross non-performing assets (NPA) of SBI, during the quarter, stood at 4.9 per cent, flat as the preceding quarter and sharply lower from 5.73 per cent in the year-ago quarter. In absolute terms, however, SBI’s NPAs have gone up slightly on a sequential basis.
But the chunk of fresh slippages and restructured loans has come down on a quarter-on-quarter basis.
The short message is that, there aren't any reasons yet to suggest that economy has come past the its bad phase. The banking system, often considered as a proxy to the real economy, doesn't yet tell us India has indeed got back to the trajectory of super-fast, high growth phase, even though the rebased economic growth numbers struggle to convince us otherwise.
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