InvestorQ : What explains the sharp growth in profits of HDFC Bank in the Dec-20 quarter?
Niti Shenoi made post

What explains the sharp growth in profits of HDFC Bank in the Dec-20 quarter?

ishika Banerjee answered.
1 year ago

Let me share with you some of the highlights of the HDFC Bank results for the quarter ended Dec-20. The results were announced late on 16 Dec evening. Here are the key points.

· HDFC Bank reported standalone profit of Rs.8758 crore, a growth of 18.1% on a YOY basis. The profits are much better than the street estimates.

· A key banking metrics, the net interest income or NII was up by 15.1% at Rs.16,318 crore in the Dec-20 quarter compared to last year.

· Total advances grew by 15.6% while the all important net interest margin or NIM turned in at an impressive 4.2% in the Dec-20 quarter.

· Deposits grew by 19% of which CASA deposits grew by 29.2%. The overall CASA deposit share in the total mix is currently at 43%.

· HDFC Bank currently boasts of a healthy liquidity coverage ratio at 146% which is well above the regulatory requirement.

· Gross NPAs of the bank fell from 1.42% last year in the Dec-19 quarter to 0.81% in the current quarter. The net NPAs fell to 0.09% hinting at substantially provided bad assets.

· Provisions and contingencies for the quarter were up by 12.2% YOY at Rs.3414 crore but this also included a specific loan provision of Rs.692 crore.

· While the risk of moratorium accounts turning into NPAs is still there, for HDFC Bank gross NPAs are unlikely to go beyond 1.35% even in a worst case scenario. These are already provided for.

· Not surprisingly, HDFC Bank saw its credit cost ratio at 1.25%, down from 1.41% in the sequential previous quarter on the back of lower cost of funds. NII was up 11.6%.

Overall, it is quite gratifying that HDFC Bank has continued to show growth even at such a huge base. That is truly positive.