Robust credit growth and stable margins helped HDFC Bank post a 34 per cent rise in net profit at Rs 812 crore for the quarter ended June 30. In the same period last year, the bank had reported a net profit of Rs 606 crore.
Gross advances for the quarter grew by 42 per cent. Of this, around 10 per cent increase in advances was due to short-term one-time wholesale loans to the telecom sector. The incremental loan growth over the March quarter was 16 per cent.
Loan demand healthy
According to Mr Paresh Sukthankar, Executive Director, HDFC Bank, “The loan demand for now seems healthy and we have usually grown at levels higher than the system. With GDP expected to grow 8.5 per cent, it is likely that system level loan growth may be around 21-22 per cent,” he said. Net interest margin is likely to be stable at around 4-4.3 per cent this year.
“The primary contributor to NIM is the deposit mix. If we can maintain a reasonable CASA (current account savings account) mix and the ratio of retail and wholesale loans remains at 50:50, then margins should be stable,” Mr Sukthankar said. This year, both yield on advances and cost of deposits are likely to move up, which would ensure stable margins.
Lower profit from sale of investments at Rs 21 crore (Rs 256 crore), pulled down other income by 10 per cent.
Provisions
As gross non-performing assets were lower, provisions declined to Rs 555 crore (Rs 659 crore).
Last year, provisions were higher as the bank was running off Centurion Bank's portfolio and due to the economic slowdown, Mr Sukthankar said. Retail loans increased 24 per cent and constituted 51.5 per cent of gross advances. Unsecured lending is 20 per cent of retail loan book, but it is growing at a slower pace than secured loans, he added.
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