Provisions Rise | Equity Research Lab
Private sector lender HDFC Bank posted a 20.3 percent year-on-year (YoY) growth in its December quarter (Q3) net profit at Rs 5,585.85 crore on strong growth in its net interest income (NII). The bank met the analyst estimates even as provisions rose considerably in the third quarter.
The bank had posted a profit after tax of Rs 4,642.60 crore in the same period last fiscal.
The net interest income (difference between interest earned and expended) rose to Rs 12,576.75 crore up 21.9 percent YoY. In the year ago, the bank had posted NII of Rs 10,314.3 crore
A Reuters poll of equity analysts had estimated a 20.6 percent increase in the net profit of the bank. It had also estimated a 20.2 percent rise in the net interest income of the bank in Q3.
Other income (non-interest revenue) grew by 27.2 percent YoY to Rs 4,921.0 crore in Q3FY19. The core cost-to-income ratio for the quarter was at 39.5 percent as against 41.2 percent in the year ago period.
Provisions rose by 63.6 percent YoY to Rs 2,211.53 crore in Q3. The bank said that the provisions for the third quarter include a charge of Rs 322.4 crore towards contingent provisions.
Asset quality stable
Asset quality remained stable for the bank in Q3. Gross non-performing assets (NPA) was at 1.38 percent as against 1.33 percent at the end of Q2FY19 and 1.29 percent posted in the year-ago period.
Net NPA as a percentage of net advances was 0.42 percent compared to 0.44 percent in the year-ago period and 0.40 percent in Q2FY19.
CASA deposits see healthy growth
HDFC Bank's total deposits rose by 22 percent YoY to Rs 852,502 crore. Here, the CASA (current account and savings account) deposits grew by 13 percent YoY with savings account deposits at Rs 235,179 crore and current account deposits at Rs 111,905 crore.
The bank said that the CASA deposits comprised 40.7 percent of the total deposits as of Q3Fy19. Their total advances at the end of the third quarter was Rs 780,951 crore.
"The bank's continuing focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 122 percent, well above the regulatory requirement," said HDFC Bank in a statement.
The bank's total Capital Adequacy Ratio (CAR) as per Basel Ill guidelines was at 17.3 percent as on December 31, 2018.