HDFC Bank Q2 results: Q2 Takeaways: HDFC Bank’s profit, asset quality in-line with estimates, subsidiaries log solid growth

NEW DELHI: HDFC Bank‘s September quarter results were in-line with Street expectations, be it on profit and NII growth counts or in terms of asset quality.

NIM for the quarter was steady at 4.1 per cent and the credit cost ratio fell to 1.3 per cent. Loans to the commercial and rural segment jumped 27 per cent while other income climbed 21.5 per cent. Overall, advances outpaced deposits. Two subsidiaries reported solid results for the quarter.

Here are the key takeaways from HDFC Bank’s Q2 results.

In-line profit, NII growth

HDFC Bank’s Q2 profit at Rs 8,834.30 crore was largely in line with ET NOW poll estimate of Rs 8,810 crore. The 17.6 per cent growth for the quarter was, however, better than 16.08 per cent YoY growth in the June quarter but less than 18.41 per cent YoY growth clocked in the same quarter last year, as per data available with corporate database AceEquity.

Other income lifts numbers

Growth in other income or non-interest revenues stood at 21.5 per cent — Rs 7,400.80 crore compared with Rs 6,092.50 crore YoY. Revenues from fees and commission jumped 25.52 per cent to Rs 4,945.90 crore from Rs 3,940.30 crore; forex exchange and derivatives revenues climbed 54.76 per cent to Rs 867.30 crore from Rs 560.40 YoY; gain on sale/revaluation of investments fell to Rs 675.50 crore from 1,016.20 crore YoY. The bank earned a dividend of Rs 912 crore for the quarter against Rs 576 crore YoY.

Commercial and rural loans up 27.6 per cent

Wholesale loans for HDFC Bank grew a mere 6 per cent for the quarter while retail loans were up 12.9 per cent. Strong growth was seen in the commercial and rural portfolio where loans jumped 27.6 per cent for the quarter on a yearly basis. The bank said overseas advances accounted for 3.5 per cent of total advances for the quarter.

Asset quality improves

Gross non-performing assets for the quarter fell to 1.35 per cent of gross advances as of September 30 from 1.47 per cent in the June quarter and 1.37 per cent in the year-ago quarter. The bank made lesser provisions and contingencies at Rs 3,924.70 crore compared with Rs 4,830.84 crore in the June quarter. Total provisions for the quarter included Rs 1,200 crore worth contingent provisions, the bank said. Asset quality improvement was largely in line with ET NOW poll.

Subsidiaries log strong results

Among two of its subsidiaries, HDFC Securities clocked a 44 per cent YoY jump in net profit at Rs 239.60 crore compared with Rs 165.80 crore in the year-ago quarter. Total income for the quarter was up 42 per cent to Rs 489.50 crore compared with Rs 344.50 crore. HDFC Bank holds 96.2 per cent stake in the broking firm.

Another subsidiary HDB Financial Services saw a turnaround, with profit coming in at Rs 191.70 crore compared with a loss of Rs 85 crore in the year-ago quarter. The NBFC reported a profit of Rs 85 crore in the June quarter. Consolidated profit for HDFC Bank rose 18.1 per cent to Rs 9,096 crore.

Balance sheet swells 14.6 per cent

At Rs 18,44,845 crore, the balance sheet size of HDFC Bank rose 14.6 per cent for the quarter, up 14.6 per cent YoY over Rs 16,09,428 crore in the year-ago quarter. Total advances grew 15.5 per cent to Rs 11,98,837 crore and outpaced deposits that were up 14.4 per cent at Rs 14,06,343 crore. CASA deposits accounted for 46.8 per cent total deposits.

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