HDFC Bank Q1 net up 33.7 per cent

Mumbai: India's second largest private lender HDFC Bank today posted a 33.7 increase in net profit for the quarter ended June 30 to Rs 1,085 crore.

The Mumbai-headquartered bank's net profit for the corresponding April-June period last year was Rs 811.71 crore.

The bank's net interest income grew 18.6 per cent to Rs 2,848 crore while income from fees and commissions was up 15.9 per cent at 922.7 crore. It earned Rs 230 crore in foreign exchange revenues and weak bond markets saw the bank taking a Rs 41 crore hit on sale of investments.

Executive director Paresh Sukhtankar said it was able to maintain net interest margin at 4.2 per cent by holding on to the share of the cheaper CASA (current and savings account) deposits and passing hikes to borrowers as a large chunk of its loans are short term ones which allow easy repricing.

The bank's NIMs will be in the 3.9-4.3 per cent range going ahead, he said.

The bank's loan growth adjusted for the one-off, short term 3G auction advances during the same period last year stood at 29 per cent and 9.7 on a sequential (over the quarter ended March 31) basis, Sukhtankar said in a tele-conference.

Assuming the economy grows at 8 per cent, the overall banking industry's growth will be in the 18-20 per cent and HDFC Bank's credit growth for the year will be a few percentage points higher than that, Sukhtankar said, declining to give any specific number as a guidance.

Sukhtankar said given the present non-conducive environment, corporates are going slow on greenfield projects.

HDFC Bank's exposure to project finance is 4 per cent, he said, adding a majority of lending to corporates comes from working capital loans.

The bank's loan book, which is almost evenly spread between retail and corporate, also witnessed an improvement in asset quality with the net non-performing assets ratio coming down to 0.18 per cent as on June 30.

Sukhtankar said presently there are no signs of any concerns on the asset quality front and added that though there are no immediate concerns, it is cautious while lending to small businesses. The bank is monitoring its SME portfolio and will be diversifying its portfolio, he said.

Courtesy the infusion of Rs 3,650 crore in tier-II capital through raising 10 year money, the bank's total capital adequacy ratio improved to 16.9 per cent and Sukhtankar said regular lending will see it shaving-off by over one per cent before end FY 12.

The share of CASA in its total deposit base slipped by two percentage points to 49.1 per cent over last year, Sukhtankar said, adding that he expects it to be in the 46-50 per cent range going ahead as there are more migrations towards the fixed deposit schemes which have good returns.

He said the short term deposit rates have peaked while there is a room of around 25 bps hike in long term deposit rates going forward. The RBI is also at the end of its rate tightening cycle and will raise its key rates by 25 bps, but the timing of it -- whether it does in the announcement scheduled on July 26 or later remains to be seen.

Source: Financial Express