HDFC bank's Q2FY21 net profit increases by 18.4 pc to Rs 7,513 cr ; Net Interest Income swells by 16.7 pc

Profit before tax (PBT) for the quarter was at Rs 10,110.3 crore. After providing Rs 2,597.2 crore for taxation, the bank earned a net profit of Rs 7,513.1 crore,  

The consolidated net profit for the quarter ended September 30, 2020 was Rs 7,703 crore, up 16.0 per cent, over the quarter ended September 30, 2019.

Consolidated advances grew by 14.9 per cent from Rs 947,440 crore as on September 30, 2019 to Rs 1,088,948 crore as on September 30, 2020.

The consolidated net profit for the half year ended September 30, 2020 was Rs 14,630 crore, up 18.8%, over the half year ended September 30, 2019.

The private lender's net interest income (interest earned less interest expended) for the quarter grew by 16.7 per cent to Rs 15,776.4 crore from Rs 13,515.0 crore for the quarter ended September 30, 2019, driven by asset growth of 21.5 per cent, and a core net interest margin for the quarter of 4.1 per cent.  

The Bank’s net revenues (net interest income plus other income) grew to Rs 21,868.8 crore for the second quarter from Rs 19,103.8 for the same quarter a year ago.

Pre-provision Operating Profit (PPOP) at Rs 13,813.8 crore grew by 18.1% over the corresponding quarter of the previous year.

The bank said it made provisions and contingencies for the quarter amounting to Rs 3,703.5 crore (consisting of specific loan loss provisions of Rs 1,240.6 crore and general and other provisions of Rs 2,462.9 crore) as against Rs 2,700.7 crore (consisting of specific loan loss provisions of Rs 2,041.3 crore and general and other provisions of Rs 659.3 crore) for the quarter ended September 30, 2019.

"Total provisions for the current quarter includes contingent provisions of approximately Rs 2,300 crore for proforma NPA as described in the asset quality section below as well as additional contingent provisions to make the balance sheet more resilient," the bank said.

The Gross and Net non-performing assets were at 1.08 per cent of gross advances and 0.17 per cent of net advances for the Q2FY21 respectively, it informed.

 Its total advances for Q2FY21 stood at Rs 1,038,335 crore, an increase of 15.8 per cent over the same quarter last year.

Domestic advances grew by 15.4 per cent over Q2FY20, it said.

As per regulatory [Basel 2] segment classification, domestic retail loans grew by 5.3 per cent and domestic wholesale loans grew by 26.5 per cent.

The domestic loan mix as per Basel 2 classification between retail:wholesale was 48:52. Overseas advances constituted 3 per cent of total advances  

 With reference to the Gross NPAs, the bank said, "The Honourable Supreme Court of India, in a public interest litigation (Gajendra Sharma Vs Union of India & Anr), vide an interim order dated September 03, 2020, directed that accounts which were not declared NPA till August 31, 2020 shall not be declared as such until further orders. Pursuant to the said interim order, accounts that would have otherwise been classified as NPA have not been and will not be, classified as NPA till such time that the Honourable Supreme Court rules finally on the matter."

However, if the Bank had classified borrower accounts as NPA after August 31, 2020 and also adopted an early recognition of NPA using its analytical models (proforma approach), the proforma Gross NPA ratio would have been 1.37 per cent as on September 30, 2020, as against 1.36 per cent as on June 30, 2020 and 1.38 per cent as on September 30, 2019.

The bank’s proforma Net NPA ratio would have been 0.35 per cent.

However, the bank has already made provision for these accounts.

"Pending disposal of the case, the bank, as a matter of prudence, has made a contingent provision in respect of these accounts," it said.

The bank said it continued to hold provisions as in the second quarter of the fiscal against the potential impact of COVID-19 based on the information available at this point in time and the same are in excess of the RBI prescribed norms.

"The Bank held floating provisions of Rs 1,451 crore and contingent provisions of Rs 6,304 crore as on September 30, 2020. Total provisions (comprising specific, floating," it informed.