However, a stable asset quality, healthy growth in other income and treasury gains helped the bank drive up the profits
Private sector lender HDFC Bank reported lowest-ever profit growth for October-December at 15% to Rs 3,865.3 crore as demonetization ate into the bank’s earnings with the advances being flat.
On a sequential basis, the 3% rise in its retail book was offset by a 3% decline in corporate book, leading to a flat growth in its advances. However, a stable asset quality, healthy growth in other income and treasury gains helped the bank drive up the profits. Pruning employee strength by optimising productivity also kept the operating expenses under check.
Paresh Sukthankar, deputy managing director, told analysts in a concall, “Demonetization was a mixed bag. We saw reduced drawdown on certain products. So, while the credit cards and the four-wheeler loans grew, others like SME loans and gold loans contracted during the quarter over the preceding quarter. We hope to resume our previous growth rate by the middle of the fourth quarter.”
HDFC Bank used to make a profit of 30% every quarter until about two years ago when it declined to 20% as the economic growth in India slowed down, crimping bank credit growth.
With the government announcing a surprise demonetization drive on November 8 last year, bank credit growth for the system as a whole fell to about 4%.
Total corporate advances of the bank grew by 16.8% over the previous year and the retail advances grew by 17.8%.
Provisions for bad loans climbed 9.5% to Rs 715.8 crore but declined 4.4% over the preceding quarter. Asset quality was more or less stable with gross non-performing assets (NPAs) rising by 3.2% to Rs 5,232.3 crore and the net NPA rising by 5% to Rs 1,564.3 crore at the end of the quarter ended December 31, 2016. Other income or the non-interest income grew 9.4% to Rs 3,142.7 crore, with fees and commissions contributing to 70% of the growth.
During this period, the bank posted net interest income (NII) of Rs 8,309.09 crore, up 17.55 % from Rs 7,068.51 crore reported in the same period last year.
Total income of the private sector lender climbed 13.48 % over the previous year to Rs 20,748.27 crore.
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