Private lender HDFC Bank had another strong quarter, with an in-line 20.3 percent growth in net profit to Rs 5,585.9 crore for the third quarter ended December 31.
The net interest income (NII) continued to drive operating profit growth, however, the asset quality did witness slight hiccups.
Here are the key highlights of the results:
Positives from the results
This was the fourth consecutive quarter with deposit growth above 20 percent, showing the strong liability franchise of HDFC Bank. The NIM has remained stable at 4.3 percent , flat quarter-on-quarter.
The bank has been able to command strong pricing on its products despite growing unsecured portfolio. This has helped the bank in maintaining its NIM. Unsecured portfolio has also constituted a substantial portion of fees in Q3FY19.
The net interest income and best operating efficiency led the operating profit growth to be the highest in four quarters.
The cost to income ratio or the operating efficiency has been improving for nine quarters in a row.
Healthy NIM and improvement in operating efficiency has led to core operating profit (i.e. operating profit less treasury income) remaining strong despite increase in slippages.
Retail loan growth is at 24 percent year-on-year basis and corporate loan growth is at 23.4 percent year-on-year basis.
The Retail loan growth is driven by personal loans, home loans, credit cards, commercial vehicle, construction equipment and two-wheelers.
Strong loan growth led to core fee income coming to Rs 3646.8 crore, up 27 percent YoY and 10.7 percent QoQ.
Negatives from the results
Slippages continued to rise for three quarters in a row, with the annualised ratio being the highest in four quarters.
However, the strong core-operating profit is aiding in provisions.
In absolute value, the gross non-performing assets are at Rs 10,902.9 crore vs Rs 10,097.7 crore, up 8 percent QoQ while the net non-performing assets are at Rs 3,301.5 crore vs Rs 3,028.2 crore, up 9 percent QoQ.
The GNPA ratio stood at 1.38 percent vs 1.33 percent QoQ and the NNPA ratio stood at 0.41 percent vs 0.4 percent QoQ. This has been one of the fastest pace of growth in GNPA over the last few quarters.
For 5 quarters in a row, low cost deposit is lagging deposit growth.
Guidance
The management expects stress in agriculture sector in Q1FY20.
Slowdown is expected in loan against property, two-wheeler and four-wheeler segments.
It is selective and cautious on NBFC and HFC.
Key numbers to note
Q3FY19 – YoY NII at Rs 12,576.8 crore vs Rs 10,314.3 crore, up 21.9 percent (Poll at Rs 12,378.5 crore) Net profit at Rs 5,585.9 crore vs Rs 4,642.6 crore, up 20.3 percent (Poll at Rs 5,589.2 crore) Asset Quality Slippages at Rs 4,000 crore vs Rs 3,285 crore, up 21.8 percent GNPA at Rs 10,902.9 crore vs Rs 10,097.7 crore, up 8 percent NNPA at Rs 3,301.5 crore vs Rs 3,028.2 crore, up 9 percent GNPA ratio at 1.38 percent vs 1.33 percent NNPA ratio at 0.42 percent vs 0.4 percent Calculated provision coverage ratio at 69.7 percent vs 70 percent Balance sheet growth details Low cost deposits (CASA) at Rs 3,47,084 crore vs Rs 3,07,119 crore, up 13 percent YoY and vs Rs 3,49,699 crore, down 0.8 percent QoQ Deposits at Rs 8,52,502 crore vs Rs 6,99,026 crore, up 22 percent YoY and vs Rs 8,33,364 crore, up 2.3 percent QoQ Advances at Rs 7,80,951 crore vs Rs 6,31,215 crore, up 23.7 percent YoY and vs Rs 7,50,838 crore, up 4 percent QoQ Retail book at Rs 4,20,900 crore vs Rs 3,39,365 crore, up 24 percent YoY and vs Rs 4,01,499 crore, up 4 percent QoQ Corporate or non-retail book at Rs 3,60,051 crore vs Rs 2,91,850 crore, up 23.4 percent YoY and vs Rs 3,49,339 crore, up 3.1 percent QoQ
