Total advances increased 15.8% to ₹10,38,335 crore, while gross non-performing assets were at 1.08% of gross advances
HDFC Bank Ltd. reported second-quarter net profit jumped 18.4% to ₹7,513.1 crore, from ₹6,354 crore a year earlier, helped by healthy growth in loans and a narrowing of NPAs.
The private lender’s net revenue (net interest income plus other income) grew to ₹21,868.8 crore in the three months ended September 30, from ₹19,103.8 crore.
Net interest income expanded by 16.7% to ₹ 15,776.4 crore, driven by asset growth of 21.5% and a core net interest margin of 4.1%.
Wholesale loans jump
Total advances increased 15.8% to ₹10,38,335 crore as of September 30. Domestic advances grew by 15.4% with retail loans rising 5.3% and domestic wholesale loans climbing by 26.5%.
Gross and net non-performing assets (NPAs) were at 1.08% of gross advances and 0.17% of net advances, respectively.
Since the Supreme Court in an interim order dated September 3 had directed that accounts which were not declared NPA till August 31, 2020, should not be declared as such until further orders, the accounts that would have otherwise been classified as NPA had not been and would not be classified as NPA till such time that the court rules finally on the matter, the bank said.
Proforma gross NPA
“However, if the bank 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% as on September 30, as against 1.36% as on June 30 and 1.38% as on September 30, 2019,” the bank said in a regulatory filing.
The lender said proforma net NPA ratio would have been 0.35%. “Pending disposal of the case, the bank, as a matter of prudence, has made a contingent provision in respect of these accounts.”
HDFC Bank said its continued focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 153%, well above the regulatory requirement.
It said while the previous quarter largely bore the brunt of the COVID-19 pandemic, some of the softness continued into the current quarter leading to lower retail loan origination, use of debit and credit cards by customers, efficiency in collection efforts and waivers of certain fees.
Card momentum better
“As a result, fees/other income were lower by approximately ₹800 crore. However, the loan and card momentum has improved over the previous quarter, thereby reducing the gap to less than half,” HDFC Bank said.
Provisions and contingencies for the quarter were ₹3,703.5 crore (consisting of specific loan loss provisions of ₹1,240.6 crore and general and other provisions of ₹2,462.9 crore).
“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,” it said.
The total balance sheet size as of September 30 was ₹16,09,428 crore, an increase of 21.5% from ₹13,25,072 crore a year earlier.
Total deposits as of September 30 were ₹12,29,310 crore, an increase of 20.3%.
The lender also said it continued to hold provisions as on September 30 against the potential impact of COVID-19 and that the same was in excess of the RBI’s norms.
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