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HDFC Bank reports 18.4% jump in Q2 profit at Rs 7,513 crore, NII rises 16.7%

HDFC Bank's CASA ratio stood at around 42 percent as of September 2020, compared to 39.3 percent as of September 2019, and 40.1 percent in June 2020

HDFC Bank, the country's largest private sector lender, reported a 18.4  percent year-on-year (y-o-y) growth in profit at Rs 7,513.11 crore for the September quarter, driven by PPoP, NII and lower tax rate.

The profit in the year-ago period was at Rs 6,345 crore.

Net interest income, the difference between interest earned and interest expended, increased by 16.7 percent y-o-y to Rs 15,776.4 crore in the September quarter, driven by asset growth of 21.5 percent and a core net interest margin for the quarter at 4.1 percent, HDFC Bank said in its BSE filing.

The continued focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 153 percent, well above the regulatory requirement.

On October 5, HDFC Bank said it registered a 15.8 percent y-o-y growth in advances approximately of Rs 10.37 lakh crore during the September quarter, while deposits aggregated to approximately Rs 12.29 lakh crore as increased around 20.3 percent y-o-y.

Asset quality has improved sequentially against expectations of marginal increase, due to the Supreme Court order on NPA classification.

Gross non-performing assets as a percentage of gross advances fell 28 bps q-o-q to 1.08 percent at the end of the September quarter, while net NPAs declined 16 bps q-o-q to 0.17 percent in Q2FY21.



However, "if the bank had classified borrower accounts as NPAs after August 31, 2020, and also adopted an early recognition of NPAs using its analytical models (proforma approach), the proforma gross NPA and net NPA ratio would have been 1.37 percent and 0.35 percent. Pending disposal of the case, the bank, as a matter of prudence, has made a contingent provision in respect of these accounts," HDFC Bank said.

Provisions and contingencies, as expected, increased to Rs 3,703.5 crore in Q2FY21, higher by 37.1 percent compared to Rs 2,700.68 crore, while the same fell 4.8 percent compared to the year-ago period.

"Total provisions include contingent provisions of approximately Rs 2,300 crore for proforma NPAs as well as additional contingent provisions to make the balance sheet more resilient," the bank said.

Non-interest income in Q2FY21 grew by 9 percent to Rs 6,092.45 crore, impacted by lower retail loan origination, use of debit and credit cards by customers, efficiency in collection efforts and waivers of certain fees, HDFC Bank said.

Pre-provision operating profit during the quarter increased 18.1 percent to Rs 13,813.78 crore, compared to the same period last year.

During the quarter ended September 2020, HDFC Bank said it purchased loans aggregating Rs 3,026 crore through the direct assignment route under the home loan arrangement with Housing Development Finance Corporation (HDFC).

Meanwhile, the bank has approved the appointment of Sashidhar Jagdishan as an Additional Director and as the Managing Director and Chief Executive Officer, subject to the approval of the shareholders of the bank, for a period of three years from October 27, 2020.

The stock gained more than 2 percent ahead of its quarterly earnings on Friday. It rallied over 12 percent during the September quarter, but corrected over 5.5 percent year-to-date.

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