Last updated: 17 Oct, 2021 | 04:07 pm
Profit beats estimates: The Net profit grew 17.6% year-on-year to Rs 8,834.30 crore beating street expectations. Analysts had earlier anticipated a net profit of about Rs 8,183 crore. Last year, during the same period, the bank reported a net profit of Rs 7,513 crore. Sequentially, the profit increased by 18%. The bank was able to post a higher profit on the back of strong loan growth and a healthy rise in Net Interest Income.
Net interest income rises: A bank’s primary business is to borrow money and lend the same at a rate higher than the rate at which they borrowed. The income generated from this differential is known as net interest income. This is an extremely important number to truly find out as to how much a bank is earning from its core operations. Net interest income for HDFC Bank grew 12.1% YoY to Rs 17,684.40 crore. Last year for the quarter ending September, the net income was Rs 15,776 crore. The analyst had predicted a net income of Rs 17,528 crore. The core net interest margin was at 4.1%.
Other Income: The non-interest income showed a strong pace of growth at 21.5% to Rs 7,400.8 crore over Rs 6,092.5 crore in the same quarter last year. The fees & commissions grew to Rs 4,945.9 crore while the foreign exchange & derivatives revenue was up at 867.3 crore. However, its gains on sale/revaluation of investments fell sharply to Rs 675.5 crore from Rs 1,016.2 crore a year ago. The miscellaneous income, including recoveries and dividend, rose to Rs 912.1 crore from Rs 575.6 crore.
HDFC bank Q2 earnings highlights:
Asset quality improves: The bank’s asset quality improved with the gross NPA ratio reducing to 1.35% of total advances as against 1.47% in last quarter. Last year, during the same time, the gross NPA was 1.37%. Net NPA was at 0.40% of net advances for the quarter ended Sep 21.
Provisions: The provisions and contingencies for the Jul-Sep quarter increased to Rs 3,924.70 crore compared to Rs 3,703.50 crore in the same period a year ago. Sequentially the provisions and contingencies have come down significantly from Rs 4,830 crore. Total provisions for the quarter included Rs 1200 crore worth of contingent provisions. Provision coverage ratio improved further to 70.9 percent in the second quarter of FY22, from 67.9 percent in June quarter.
Deposits and Advances: CASA capital is the cheapest source of capital for banks. The higher the number, the more profit a bank can earn. The CASA (Current and Saving Account) deposit grew by 28.7% on-year and stood at Rs 14.6 lakh crore in Jul-Sep 21 quarter. The CASA deposits constitute 46.8% of the bank's total deposits. Total advances grew 15.5% to 11.98 lakh crore. The retail loans grew by 12.9%, commercial and rural banking loans grew by 27.6%.
HDFC Bank Q2 Results Review:
HDFC Bank has reported a strong set of numbers for the quarter ended September with topline and bottomline beating estimates. The healthy growth in Deposits and Advances has resulted in a strong overall growth. The asset quality of the bank has also seen an improvement.The Capital Adequacy Ratio (CAR) was at 20% as on September 30, 2021, much above a regulatory requirement of 11.07%.
The lender's retail push coincides with a recent removal of a ban by the Reserve Bank of India on issuing new credit cards. However, the central bank has retained its curb on launching new online products by the bank after repeated technology glitches. The current economic recovery is helping the banking sector as seen by the strong set of numbers by HDFC Bank in the quarter. Shares of HDFC Bank on Thursday closed 2.86% higher at ₹1,685.90 on BSE.