HDFC Bank Q1 Results: Net Profit Rises 30%, Meets Estimates

India's largest private sector lender HDFC Bank Ltd.'s April-June profit rose meeting estimates on account of higher core income and lower provisions. 

The bank's net profit for the quarter stood at Rs 11,951 crore, up 29.9% year-on-year. Analysts polled by Bloomberg estimated a Rs 11,375-crore net profit for the three months. 

Net interest income, or core income, for the bank rose 21.1% from a year ago and stood at Rs 235,99 crore.

Gross non-performing asset ratio rose 5 basis points sequentially to 1.17%. Net NPA rose to 0.3% as of June 30 compared with 0.27% as of March 31. 

Provisions for the quarter fell 10.2% year-on-year to Rs 2,860 crore.

HDFC Bank's merger with HDFC Limited also became effective starting July 1. The combined entity saw its advances rise 13% year-on-year as of June 30 to Rs 22.45 lakh crore, according to a July 5 exchange filing.

"We added 2.4 million new liability relationships in the quarter, taking us to 85 million total customers," Srinivasan Vadiyanatha, chief financial officer of HDFC Bank, said in a media conference call on Monday.

HDFC Bank has allocated over 311 crore new shares of the bank to shareholders of merged entity HDFC Ltd, according to a July 14 exchange filing by the bank.

HDFC Bank's total deposits rose 19.2% year-on-year in the quarter ended June 30 to Rs 19.13 lakh crore. Low-cost current account savings account or CASA deposits grew 10.7% year-on-year, with savings account deposits at Rs 5.6 lakh crore and current account deposits at Rs 2.52 lakh crore.

HDFC Bank's CASA ratio—share of CASA deposits in overall deposits—the at the end of Q1 stood at 42.5%, down from 45.8% a year earlier.

Time deposits were at Rs 11 lakh crore, a rise of 26.4% from a year ago.

The first quarter is typically a low deposit accretion quarter, Vaidyanathan said. "Growth was far more than what we expected in the March quarter and we have built on top of that."

Total advances at the end of Q1 were at Rs 16.15 lakh crore, an increase of 15.8% year-on-year. Domestic retail loans grew 20.1%, commercial and rural banking loans rose 29.1% and corporate and other wholesale loans were up 11.2%

When it comes to pricing loans to large corporates, HDFC bank has seen has seen some disruption over the last few quarters, Vaidyanathan said. "From a relationship point of view, we want all of these top corporates with us... We are however not going to compete on pricing."

For the quarter ended June 30, the lender's non-bank subsidiary HDB Financial Services Ltd. reported a net revenue of Rs 2,314 crore in the fourth quarter, up 5.5% year-on-year.

Net profit for the company stood at Rs 567 crore, up 28.5% year-on-year. HDB Financial's total loan book was Rs 73,568 crore as on March 31. Stage 3 loans, or advances were repayments were overdue for more than 90 days, were at 2.48% of gross loans.

HDFC Bank's stock was trading 0.98% higher with shares changing hands for Rs 1,660.7 apiece as of 12:52 p.m. on Monday compared to a flat Nifty Bank Index.