HDFC Bank: Q1 net profit up 20%

Share price of HDFC Bank rallied nearly 5% in early trade as investors cheered the private sector lenders strong earning performance for the fiscal first quarter to June 30.
One of the largest private sector lender reported 19.6% rise in net profit at Rs 6,658.6 crore during the quarter under review. The Q1 PAT was derived after providing Rs 2,279.1 crore for taxation in the quarter.

Similarly, net interest income (NII) which is the difference between interest earned and expended, stood at Rs 15,665.4 crore during the latest quarter, increasing by 17.8% from Rs 13,294.3 crore in the corresponding period of the previous year. Performance in NII was driven by growth in advances of 20.9% and a growth in deposits of 24.6%.
The net interest margin (NIM) for the quarter was at 4.3%.

Other income (non-interest revenue) stood at Rs 4,075.3 crore, which was 20.6% of the net revenues for the quarter as against Rs 4,970.3 crore in the corresponding quarter of the previous year.
Other income comprise of fees & commissions at Rs 2,230.7 crore, foreign exchange & derivatives revenue of Rs 436.6 crore, gain on sale/revaluation of investments of Rs 1,086.7 crore and miscellaneous income, including recoveries and dividend of Rs 321.3 crore.

During the quarter, provisions and contingencies stood at Rs 3,891.5 crore as against Rs 2,613.7 crore a year ago
same period.
The private sector lender’s Core Credit Cost ratio was 1.08%, as compared to 0.77% in the quarter ending March 31, 2020, and 1.07% in the quarter ending June 30, 2019.
Meanwhile, the gross non-performing assets (GNPA) was at 1.36% of gross advances as on June 30, 2020 (1.2% excluding NPAs in the agricultural segment) as against 1.26% of Q4FY20 and 1.40% of Q1FY20.
In Q1FY21 period, HDFC Bank has used its analytical models to determine slippages, resulting in a more expedited recognition of NPAs, as well as accelerated corresponding specific provisions.

The Bank also continues to hold provisions as on June 30, 2020, against the potential impact of COVID-19 based on the information available at this point and the same are in excess of the RBI prescribed norms.
As on June 2020, HDFC Bank’s distribution network was at 5,326 branches and 14,996 ATMs / Cash Deposit & Withdrawal Machines (CDMs) across 2,825 cities / towns as against 4,990 branches and 13,727 ATMs / CDMs across 2,764 cities / towns as of June 30, 2019 with 50% of its branches in semi-urban and rural areas.

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