HDFC Bank has reported an 18.4 percent year on year (YoY) growth in profit at ₹ 7,513.11 crores for the September quarter. The profit, according to them is due to pop, NII, and lower tax rates. A year ago, for the same quarter, the profit stood at ₹ 6,345 crores.
Net Interest Income, which is the difference between the interest earned and the interest born by the financial unit has also risen. Net Interest Income, as reported by the bank has risen by 16.7 percent y-o-y and stands at ₹ 15,776.4 crores in the September quarter. In the BSE filing, HDFC Bank has reported that the September quarter saw asset growth of 21.5 percent and core net interest margin for the quarter at 4.1 percent.
The second-largest public sector lender also focused on deposits that help in the maintenance of a healthy liquidity coverage ratio at 153 percent which is well above the regulatory requirement.
On the 5th of October, the lender had registered a 15.8 percent YoY growth in advances of approximately ₹ 10.37 lakh crores. Deposits of the bank stood approximately ₹ 12.29 lakh crore as increased around 20.3 percent YoY.
The asset quality of the bank has also improved against expected marginal improvement. This is due to the Supreme Court order on NPA classification.
Gross non-performing assets as a percentage of gross advancements also fell 28 bps quarter on quarter. Gross non-performing assets stand at 1.08 percent at the end of the September quarter. The bank also reported that net NPAs declined 16 bps quarter on quarter to 0.17 percent in Q2FY21.
HDFC Bank had said, “if the bank had classified borrower accounts as NPAs after August 31, 2020, and also adopted an early recognition of NPAs using its analytical models (proforma approach), the proforma gross NPA and net NPA ratio would have been 1.37 percent and 0.35 percent. Pending disposal of the case, the bank, as a matter of prudence, has made a contingent provision in respect of these accounts.”
Provisions and contingencies increased to ₹ 3,703.5 crores in Q2. This increase is by 37.1 percent compared to ₹ 2,700.68 crores, while the same fell 4.8 percent compared to the year-ago period.
The bank has also said, “Total provisions include contingent provisions of approximately Rs 2,300 crore for proforma NPAs as well as additional contingent provisions to make the balance sheet more resilient.”
Non-interest income was also reported to grow in Q2 by 9 percent to ₹ 6,092.45 crores. The bank has said that this increase in Net Interest Income is due to lower retail loan origination, use of debit and credit cards by customers, efficiency in collection efforts, and waivers of certain fees.
The bank has also reported that during this quarter be they have bought loans of ₹ 3,026 crores through the direct assignment route under the home loan arrangement with Housing Development Finance Corporation (HDFC).
Board approves appointment of new CEO
On Saturday, the board of HDFC Bank has approved the appointment of Sashidhar Jagdishan as their new Managing Director and Chief Executive Officer for a three-year term. The appointment of the new CEO has already been approved by the Reserve Bank of India.
In a filing to BSE, the bank said that the new appointment might be placed before the shareholders of the Bank for their approval, by way of the postal ballot ( remote e-voting).
Sashidhar Jagdishan had joined the bank back in 1996 as a Manager in the Finance function. He then became business Head (Finance) in 1999 and thereafter was appointed as the Chief Financial Officer in the year 2008.
Before this, he was a crucial member as a Strategic Change Agent of the Bank and also looked after the functions including Finance, Human Resources, Legal & Secretarial, Administration.