All-round retail show by HDFC Bank

Sustained loan demand helped propel the net profit of HDFC Bank, India’s second-largest private sector bank, by 31.6% last fiscal to Rs5,167.10 crore.

At Rs32,530 crore, total income was up 34% on year.
On a consolidated basis, too, net profit was up 31.4% at `5,247.02 crore and total income up 34.22% at `33,057.95 crore.

The performance beat analyst forecasts and sent the stock up over 1% during the day’s trade.

The lender managed to record a year-on-year growth in almost all segments of retail advances during the fiscal despite high interest rates.

As of March 31, retail loans made up 55% of its total advances, up a good three percentage points over the fiscal. On a year-on-year basis, retail advances rose 33.72% to Rs107,126 crore.

The only retail segment which recorded a drop was loans against securities, which fell 9.1% to Rs1,046 crore. The auto loans segment recorded a growth of 19.26% at Rs26,398 crore and the home loans segment a growth of 24.1% at Rs14,259 crore.

On a quarter-on-quarter basis, however, all the segments fired well, leading to a 6.76% jump in advances.

As of March 31, total net advances were up 22.2% year on year at Rs195,420 crore and total deposits up 18.3% at Rs246,706 crore.

A slight decline in provisions towards risky assets also helped.
Asset quality continued to remain healthy with gross non-performing assets (NPAs) as on March 31 at 1% of gross advances as against 1.1% at the end of the previous year. The ratio of net NPAs to net advances as of March 31 remained stable at 0.2%.

The bank remains bullish on credit growth this fiscal. “We are expecting that the total banking industry loan growth for this fiscal will be around 17% and we usually try and grow a few percentage points more than that. We would hope to growth 3-4% faster than the banking system. How fast the banking system will grow is also a function of how the economy does. All of this is based on assumption of approximately 7% GDP growth,” said Sukthankar.

As for a reduction in interest rates, however, HDFC Bank will follow larger peers, said Sukthankar. “The base rate can be reduced when we drop our deposit rates. No bank will act in isolation in terms of reducing the deposit rates. We all have to be competitive in the market place. Once some of the larger banks start dropping the deposit rates, then we would be happy to fall in line and then review the deposit rates and the appropriate base rate.”