Net profit at India’s largest privately-owned bank, HDFC Bank, grew 17.6% for the quarter ended September 30, on the back of robust growth in net interest income, fees and commissions.
The private lender posted a profit of 88.34 billion rupees (US$ 1.17 billion) for the second quarter, up from 75.13 billion rupees ($1 billion) posted in the same period last year. Sequentially, the net profit has grown 14% from 77.29 billion rupees in the April-June quarter.
During the July-September quarter, net interest income rose 12.1% to 176.84 billion rupees from 157.76 billion rupees a year ago. That is the revenue generated from a bank’s interest-bearing assets after deducting the expenses associated with interest-bearing liabilities. HDFC’s net interest margin remained stable at 4.1% as compared with the same period last year.
In a regulatory filing with the Bombay Stock Exchange, the bank stated that its non-interest income rose 21.5% to 74 billion rupees during the quarter, up from 60.92 billion rupees in the year-ago quarter.
The Mumbai-based lender said the asset quality improved sequentially. Gross non-performing assets were at 1.35% of gross advances as of September 30, 2021, as against 1.47% as of June 30, 2021, and 1.37% as of September 30, 2020. It has set aside 39.2 billion rupees toward provisioning bad loans in the September quarter, down from 48.3 billion rupees in the preceding quarter.
Total advances grew 15.5% to 11.98 trillion rupees. While retail loans grew by 12.9%, commercial and rural banking loans grew by 27.6%.
The Capital Adequacy Ratio (CAR) was at 20% as of September 30, 2021, much above a regulatory requirement of 11.07%.
With the easing of lockdowns following a dip in Covid-19 cases, the bank is looking to boost its retail lending portfolio. This is in contrast with the bank’s conservative approach last year when the rise in coronavirus cases had hit businesses and crippled their ability to repay loans.
Technical glitches
The Reserve bank of India in December last year ordered HDFC Bank to halt all digital banking launches and issuing of credit cards to new customers. This was following a series of technical glitches in internet banking, mobile banking, and payment utilities of the bank over the past two years.
The central bank had August allowed HDFC Bank to resume issuing credit cards. The lender claimed it has since then issued over 400,000 credit cards during the two-month period.