MUMBAI: Private-sector lender HDFC Bank on Tuesday reported a 20.1 per cent rise in its net profit at Rs 4,151 crore for the quarter ended September 2017 against Rs 3,455.33 crore registered a year ago.
The increase in profit was on the back of robust core income, including net interest income that grew 20.75 per cent at Rs 9,652.07 crore.
Gross NPAs swelled to 1.26 per cent at Rs 7,702.84 crore — a 52 per cent increase from Rs 5,069.04 crore last year — from 1.24 per cent in the preceding quarter and 1.02 per cent in the year-ago period. Net NPAs stood at 0.43 per cent. Provisions and contingencies soared 97.09 per cent to Rs 1,476.19 crore, though they declined 5.3 per cent on a sequential basis.
The bank’s provisions jumped primarily due to one restructured account under the 5:25 scheme that HDFC Bank continues to classify as a performing account. According to Paresh Sukthankar, deputy managing director, HDFC Bank, the account cannot be termed ‘divergence’ as it was in dialogue with the regulator.
“It is a standard, performing account with no outstanding dues for us. But, we have set aside contingency provisions,” he said, adding that most of the Rs 397 crore marked as “general provisions” is towards the
purpose. Its overall provisions almost doubled to Rs 1,476 crore from the year ago period’s
Rs 749 crore.
Stress in agri-book, too, partly led to the spurt in NPAs in the preceding quarter. HDFC Bank has exposure to two (Rs 200 crore and fully provided for) of the 40 RBI-shortlisted accounts to be resolved through the NCLT. HDFC’s overall capital adequacy stood at 15.1 per cent with the core tier-I at 13.3 per cent and the bank has no capital raising plans for now.
Meanwhile, Sukthankar said the bank passed on the benefits of lower rates, leading to a 0.10 per cent drop in its net interest margins to 4.3 per cent. The loan growth was split almost evenly between the retail and wholesale segments, he said, adding that the latter was driven by demand for working capital.
Term loans or project loans demand, which would signify an uptick in the economy, are still multiple quarters away, he said, adding that the banks will participate in the same.
Stable asset quality
The bank’s gross NPA increased marginally to 1.26 per cent from 1.24 per cent in the preceding quarter and 1.02 per cent in the year-ago period. In absolutre terms, the gross NPA stood at H7,702.84 crore at the end of September quarter