HDFC Bank net up 25% on loan growth

The country’s second largest private sector lender, HDFC Bank, reported an increase of 25.1% in net profit at Rs 2,325.7 crore for the third quarter of current financial year on the back of strong credit growth and cost control measures. Lower provisioning on improved asset quality also helped.

“The profit growth was clearly boosted by tight cost control. Our asset quality also improved and that gave us some cushion in terms of lower provisioning,” Paresh Sukthankar, deputy managing director of HDFC Bank.

Among other cost control measures, the bank went soft on hiring. Sukthankar said that the staff strength was down to 68,200 at the end of December 31 from 69,700 a year ago. “We would have continued to hire but when we needed, we reallocated in some cases. But it is more of natural attrition and we may not replace one-for-one,” he said adding that this was despite adding 274 branches in first nine months of current financial year.

As a result, the bank’s cost-to-income ratio improved to 42.7% from 47.2% in the third quarter last financial year.

Overall credit growth was at 22.9% led by 22.1% growth in wholesale loans and 13.6% in retail loans. Deposit growth was at 22.9% from a year ago. The bank raised $3.4 billion under the central bank’s special window for swapping foreign currency deposits. The net interest margins (NIMs) came in at 4.2% for the third quarter. It was at 4.3% a year ago. Sukthankar said the bank aims at maintaining NIMs in the 4.1-4.4% range at the end of current financial year. Net interest income was up by 16.4% to Rs 4,634.8 crore.