HDFC Bank Q2 Result, Profit grows 17.6%

HDFC Bank, the largest private sector lender in India, has reported standalone profit at Rs 8,834.31 crore for September 2021 quarter, a 17.6 percent higher compared the corresponding period last fiscal, driven by higher other income, and marginal increase in provisions. The sequential growth in profit was at 14.3 percent for the quarter.

Net interest income, the difference between interest earned and interest expended, increased 12.1 percent YoY to Rs 17,684.4 crore during the quarter, with healthy loan growth.

"Advances grew at 15.5 percent reaching new heights driven through relationship management, digital offering and breadth of products. Core net interest margin was at 4.1 percent," said HDFC Bank in its BSE filing.

The advances increased to Rs 11.98 lakh crore in Q2FY22 YoY and the same increased 4.4 percent, sequentially. Loan growth was supported by, "retail segment that registered 12.9 percent YoY growth and commercial & rural banking segment that grew 27.6 percent YoY during the quarter," said the bank, adding other wholesale loans grew by around 6 percent YoY.

The bank further said new liability relationships added during the quarter were at an all-time high. "This continued focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 123 percent, well above the regulatory requirement, which positions the bank favourably to capitalise on the opportunities that would arise as the economy gains momentum during the festive months.

Deposits at Rs 14.06 lakh crore in the quarter ended September 2021 increased 14.4 percent compared to corresponding period previous fiscal, with retail deposits growth 17.5 percent and wholesale deposits at 2 percent YoY.

Provisions and contingencies at Rs 3,924.66 crore for the September quarter included contingent provisions of Rs 1,200 crore, growing 6 percent over a year-ago period but declined 18.8 percent on sequential basis.

The bank said it held floating provisions of Rs 1,451 crore and contingent provisions of Rs 7,756 crore as of September 2021, and total provisions were 163 percent of the gross non-performing loans as of September 2021.

Provision coverage ratio improved further to 70.9 percent in the second quarter of FY22, from 67.9 percent in June quarter.

On the asset quality front, gross non-performing loans at 1.35 percent of gross advances as of September 2021 were higher compared to 1.47 percent in June 2021 quarter, while net non-performing assets at 0.4 percent for the quarter declined from 0.48 percent in previous quarter.

Pre-provision operating profit at Rs 15,807.3 crore in Q2 grew by 14.4 percent over the corresponding period of previous year, the slowest growth in 21 quarters.

HDFC Bank said other income (non-interest income) at Rs 7,400.8 crore in Q2FY22 grew by 21.5 percent year-on-year, as fees & commissions, which accounted for 67 percent of other income, jumped 25.5 percent to Rs 4,945.9 crore YoY.

Foreign exchange & derivatives revenue, and miscellaneous income (recoveries and dividend) grew by 55 percent to Rs 867 crore and 58.5 percent to Rs 912 crore YoY respectively, but gain on sale/revaluation of investments fell 33.5 percent to Rs 675.5 crore in the same period, it added.

During the quarter ended September 2021, the private sector lender purchased loans aggregating Rs 7,132 crore through the direct assignment route under the home loan arrangement with promoter Housing Development Finance Corporation.