HDFC Bank net profit up 20.16% to Rs2794.51 crore - Livemint

NPAs were at 0.26% as compared to 0.3% a year ago while Gross NPA was at 0.99% verses 1.01% a year ago. Photo: Pradeep Gaur/Mint

Mumbai: HDFC Bank Ltd on Saturday said net profit for October-December 2014 rose 20% to Rs2795 crore from Rs2,326 crore in the corresponding period in 2013, led by higher net interest income and other income.

The profit was higher than a poll of 33 analysts by Bloomberg which had pegged it at Rs 2,770 crore.

Net interest income (NII) or difference between the interest earned on loans and that paid on deposits increased 23% to Rs5700 crore in the quarter ended December 2014 from Rs4,635 crore in the quarter ended December 2013.

The bank earned interest through both working capital loans to companies which grew at 14% and loans to individuals to buy cars, two wheelers and consumption spending which grew 12%. Overall the bank’s loan book increased 17% year-on-year.

Net interest margin (NIM) or the difference between the interest rate a bank earns on loans and the yield it pays for its deposits increased to 4.4% from 4.2% last year.

Other income or income earned fees, trading in foreign exchange and gain on revaluation or sale of investments increased 18% to Rs2535 crore in October-December 2014 from Rs2,148 crore in October-December 2013.

Paresh Sukthankar , deputy managing director at HDFC Bank said the bank will continue to grow faster than the system but he did not see any broad based recovery in loan demand on the ground.

“We have seen a pick up in retail loans but we have to see whether its only a trend in this quarter. On the whole there is no meaningful pick up across the board though it is fair to expect loan demand to increase as the investment cycle picks up and as large companies with stronger balance sheets raise equity for the next round of funding,” Sukthankar said.

Net non performing assets (NPAs) were at 0.26% as compared to 0.3% a year ago while Gross NPA was at 0.99% verses 1.01% a year ago.

Provision for bad loans increased 44% to Rs560 crore from Rs389 crore in December 2013 as the bank did not have the benefit of a Rs120 crore write-back it had last year.

Earlier this month HDFC Bank raised Rs9,766 crore by selling shares to domestic institutional investors and American Depository Receipts (ADRs) in New York. As a result of the equity infusion the bank’s capital adequacy ratio (CAR) would improve by 2.2 percentage points to 2.3 percentage points from 15.7% to 17.9% or 18%, Sukthankar said.

“As a result of this issue our foreign shareholding has increased to 73.50% from 73.30%,” he added. HDFC bank’s foreign shareholders also include its parent Housing Development Finance Corp Ltd (HDFC).

HDFC did not participate in the issue because it did not qualify as either a local institutional investor or a American investor as a result, its shareholding in the bank has reduced to 21.7% from 22.4%, Sukthankar said.

“If HDFC wants to recoup its holding in the bank, we can do a preferential issue like we have done in the past,” Sukthankar said.

Sukthankar said that the bank could reduce its lending rate by March as liquidity improves and expectations that growth picks up.

“If GDP growth picks up then it will add 2% to 3% to the system loan growth and our balance sheet will also be higher. It remains to be seen if the loan growth comes from capital expenditure demand from companies or consumption demand from individuals,” he said.

On Friday, HDFC Bank shares ended at Rs1065.85 on BSE, down 1.1% from previous close while India’s benchmark Sensex Index rose 1.01% to close at 29094.93 points.