HDFC Bank posts over 20% yoy rise in Q1 net profit; farm loan waiver concerns

Key Highlights:

• HDFC Bank net profit at Rs 3,893.84 crore in Q1
• Provisions rises by 83.30% yoy to Rs 1,588.76 
• Gross NPAs at 1.24% in Q1FY18 from 1.04% in Q1FY17

HDFC Bank witnessed over 20% year-on-year rise in its financial result for June 30, 2017 (Q1FY18). The bank posted net profit of Rs 3,893.84 crore, growing by 20.22% compared to Rs 3,238.91 crore in the corresponding period of the previous year.

However, Q1 net profit was a decline of 2.41% from Rs 3,990.09 crore in the preceding quarter.

Net Interest Income (NII) stood at Rs 9,370.74 crore, registering growth of 20.42% year-on-year (YoY) and 3.48% quarter-on-quarter (QoQ) basis.The bank stated that the growth was 
driven by average loan growth of 20.7% and a core net interest margin for the quarter of 4.4%

While total income from operations was at Rs 22,185.40 crore as againsts Rs 19,322.60 crore a year ago same period.

Provisions of HDFC Bank in this period was at Rs 1,588.76 crore, increasing by 83.30% yoy and 25.91% qoq.

Gross NPAs in percentage terms stood at 1.24% versus 1.04% in Q1FY17 and 1.05% in Q4FY17. In value terms it was at Rs 7,242.93 crore, higher compared to Rs 4,920.89 crore in Q1FY17 and Rs 5,885.66 crore in Q4FY17.

HDFC Bank said, “Recoveries from agricultural advances were impacted during the quarter by borrower expectations of farm loan waivers arising out of policy announcement in certain states.”

It added, “These loan waiver policies are in the process of being finalised and implemented. As a prudent measure, the bank has enhanced specific coverage for its non-performing agricultural advances.”

This Q1, of the total increase in gross NPAs – 60% pertained to the agricultural segment.

Other incomes were at Rs 3,516.70 crore was 27.3% of the net revenues this Q1FY18. This was higher compared to other income of Rs 2,806.60 crore which has 25.3% of net revenue in Q1FY17. 

Performance of four components of other income this Q1FY18 were - fees & commissions at Rs 2,578.10 crore, foreign exchange & derivatives revenue of Rs 296.80 crore, gains on revaluation/ sale of investments at Rs 331.40 crore and miscellaneous income (including recoveries and dividend) at Rs 310.30 crore. 

As of June 2017, the bank's total balance sheet stood at Rs 895,653 crore from Rs 755,631 crore a year ago similar period.

Total deposits were at Rs 671,376 crore, rising by 17% yoy in Q1. While CASA deposits saw healthy growth with savings account deposits growing by 26.5% to Rs 193,105 crore and current account deposits at Rs 102,030 crore up 34.1%.

Advances as of June 2017, were at Rs 580,976 crore, growing by 23.4% yoy.

During the quarter, the bank raised Additial Tier 1 Capital bonds of Rs 8,000 crore and Tier 2 Bonds of Rs 2,000 crore.

The bank touched a new of Rs 1,731.55 per piece after the announcement of the result. At 1235 hours, share price of HDFC Bank was trading at Rs 1730.85 per piece up 1.61% on BSE.