Mumbai: HDFC Bank on Tuesday reported a 20 percent rise in net profit, its slowest growth in the past five quarters, at Rs 2,381.5 crore for second quarter ended September 30, notwithstanding a healthy jump in core interest income and margins.
This is also the fifth consecutive quarter when the country's second largest private sector bank has posted a sub-30 per cent increase in quarterly profits.
For 37 straight quarters, the bank posted at least 30 percent profit growth.
The bank had earned Rs 1,982.32 crore net profit in July- September quarter of the last fiscal.
The city-headquartered bank's net interest income grew 23.1 percent to Rs 5,511 crore during the reporting quarter, while other income grew at tepid 11 percent at Rs 2,047 crore restricted by a halving of its forex and derivative revenue at Rs 221.7 crore.
When asked if a profit growth in the 20s is the new normal, bank's Deputy Managing Director Paresh Sukthankar said the bank does not give any guidance and said generally the profit growth is a function of GDP growth. Maintaining sound asset quality and margins is also a key for the bank, he added.
Deposits grew 24.8 per cent, while overall advances grew 21.8 percent, while total income rose to Rs 13,894.7 crore from Rs 11,937.7 crore.
However, the bank exceeded its own forecast on the key net interest margin, which expanded to 4.5 percent as against the general guidance of 3.9-4.2 percent.
Sukthankar attributed the expansion in margins to base effect, an increase in the low-cost Casa deposit base at 43.2 percent and higher growth in high interest earning retail loans.
On the future trajectory of margins, he said the bank will maintain it in the 4-4.4 percent range.
Asked about the lending rates, especially in the wake of the bank exceeding its guidance on margins and rival Axis Bank cutting its base rate by 10 bps last week, Sukthankar said HDFC Bank has not taken a call yet and is comfortably placed on liquidity.
He further said the base rate is a function of the deposit rates, which are in turn guided by the liquidity position.
The second largest private sector lender's retail advances grew 17 percent (disbursements were up 21.8 percent), while wholesale advances jumped 22 percent, Sukthankar said.
He said a GDP growth of over 5.5 percent will result in the system's credit growth, which has barely breached the double digit mark this fiscal, growing to 12-13 percent and the bank shall outpace the system by 4-5 percent.
Demand from corporates for greenfield projects is yet to come in and Sukthankar said the same is a few quarters away, adding its corporate book growth came in form of working capital loans and some medium term loans.
On the asset quality front, he said the bank reported an improvement in the gross non-performing assets ratio at 1.02 per cent and Sukthankar said bank's the commercial vehicle and construction equipment portfolios, which had witnessed problems in the recent past, has shown "slight improvement" during the quarter.
In absolute terms, its provisions rose to Rs 455.9 crore from Rs 385.9 crore year-on-year.
"The bank is mulling to utilise the infra bonds instrument and will be approaching shareholders for an enabling resolution to raise money from through private placement," Sukthankar said, adding, it has not frozen any amount to be raised yet.
On the retail front, the bank notched good growth in the auto loans and personal loans, and also bought Rs 800 crore of housing loans from its parent HDFC.
The bank scrip ended the session 0.12 percent up at Rs 895.90 apiece on the BSE.
