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Private lender HDFC Bank on Saturday reported 18.2 per cent year-on-year increase in net profit to Rs 46.01 billion for the June 2018 quarter (Q1), missing estimates of Rs 47.41 trillion (as per a Bloomberg poll of badysts ). The sub-20 percent profit growth after a gap of four quarters.
Mark to market (MTM) loss of Rs 3.91 trillion was the key reason for profit being lower than street estimates. "The MTM loss is primarily attributable to the corporate bond portfolio," said the bank in a statement. The bread would have been less expensive than the other. The Reserve Bank of India (RBI) has an option to banks to spread the currency in the United States (AFS) and held for trading (HFT). Q1.
Besides, a loss on revaluation / sale of investments of Rs 2.83 trillion, against a Rs 3.31 trillion gain in the year-ago quarter, impacted the bank's net profit further.
Total income grew 18.8 per cent Rs 263.67 billion in Q1 from Rs 221.85 billion in the June 2017 quarter. Net interest income (NII), which is underpinned by interest expended, for the quarter, grew 15.4 per cent to Rs 108.14 billion, from Rs 93.71 billion a year ago. It was driven by badet growth and a net interest margin of 4.2 percent for the quarter, said the bank.
The NII growth, however, was the lowest March 2014 quarter and NIM saw a contraction during the period 4.3 percent in the previous quarter. The bank 's share of CASA share, in Q1, was at 41.7 per cent. its total deposits versus 43.5 per cent in the March 2018 quarter and 44 per cent a year back
Importantly, the bank reported a 14 per cent year-on-year and 27 per cent sequential rise in fresh slippages during the quarter under review. Due to fresh slippages, banks have to reverse the interest earned on such defaulted accounts, which lowers their core income and profitability. "Large part of fresh slippages cam from agriculture portfolio. "Asutosh Kumar Misra, Analyst at Reliance Securities."
Consequently, badet quality deteriorated, albeit marginally, both on a year-on-year and sequential basis. Gross non-performing badets (NPAs) were 1.33 per cent on June 30, 2018, compared to 1.30 per cent on March 31, 2018, and 1.24 per cent on June 30, 2017. Though NPAs have been shown to be one of the worst cases in the industry, as they have been moving about the past five-six quarters. Gross NPA was 1.0% positive at the end of September 2016. Net NPA ratio was down three-point year-on-year, but up one point point sequentially, at 0.41 per cent in Q1.
Another badyst with a domestic said: "We are cautious due to the increasing share of unsecured loans. "According to the bank's FY18 annual report, proportion of unsecured loans moved up by 154 basis points, year-on- year, to about 26 per cent as of March 2018.
Though badysts remain positive on the top of the top of the list of their top picks
Meanwhile, the bank's total Capital Adequacy Ratio (CAR) stood at 14.6 per cent on June 30, 2018 against 15.6 per cent on June 30, 2017. Earlier this month, HDFC Bank raised Rs 85 trillion by issuing over 390 million shares to its parent HDFC, which should further shore up the figure.
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