HDFC Bank first quarter net profit increases 20%

Jerome Frank
July 25, 2017

"Recoveries from agricultural advances were impacted during the quarter by borrower expectations of farm loan waivers arising out of policy announcement in certain sates", said Paresh Sukthankar, deputy managing director, HDFC Bank.

"We believe that a fair portion of this impact does reflect changed customer behaviour in anticipation of loan waiver which were announced", he said adding the lender had made higher provisioning for these NPAs than the regulatory requirement.

"Operating expenses for the quarter ended June 30, 2017 were Rs 5,367.5 crore, an increase of 12.6 per cent over Rs 4,768.9 crore during the corresponding quarter of the previous year".

The peril called higher provisioning and bad loans extended to HDFC Bank, which until now remained largely unscathed.On Monday, the private-sector lender reported an enviable 20.2 per cent rise in net profit at Rs 3,894 crore for the quarter ended June 2017, but disappointed investors posting its highest non-performing asset (NPA) ratio in years, courtesy farm loan waivers.

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Shares of HDFC Bank rose by 2 per cent to Rs 1,737.90 - its 52-week high - on BSE. The general provisions also include Rs 121 crore set aside towards agriculture loans.

Net interest income was up 20 per cent year-on-year (yoy) at Rs 9,371 crore.

HDFC said its asset quality worsened primarily due to increase in non-performing assets. Net NPAs or bad loans, however, came down to 4.65% in June 2017 from 6.19% a year ago. "This outperformance on loan growth front with a huge margin in comparison to the industry is really commendable as it is the second largest bank in India in terms of loan book size". Other income grew 25.3 per cent to Rs 3,516.7 crore helped largely by a 30 per cent growth in fee and commissions.

CASA deposits increased 30 percent annually to Rs 36,318 crore, with Current Accounts forming Rs 7,998 crore and Saving Accounts Rs 28,320 crore during the quarter under review.

Other reports by Guamnewswatch

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