HDFC Bank Q4 net up 15 pc at Rs 7,280 cr; sees challenges ahead on Covid-19

New Delhi, Apr 18 () HDFC Bank on Saturday posted a 15.4 per cent rise in consolidated net profit at Rs 7,280.22 crore for the March quarter on healthy interest income, even as it faced a hit towards the end of the fiscal due to the Covid-19 pandemic.

The private sector lender had posted a consolidated net profit of Rs 6,300.81 crore in the corresponding January-March period of the preceding fiscal year 2018-19.

Consolidated total income grew to Rs 38,287.17 crore in the reported quarter, Rs 33,260.48 crore in the year ago period, the bank said in a regulatory filing.

On a standalone basis, the bank's net profit grew by 17.7 per cent to Rs 6,927.69 crore from Rs 5,885.12 crore. Income rose to Rs 35,917.63 crore as against Rs 31,204.46 crore earlier.

Net interest income -- the key gauge of profitability which is interest earned minus interest expended -- for the March quarter rose to Rs 15,204.10 crore from Rs 13,089.50 crore a year ago, driven by growth in advances of 21.3 per cent and a growth in deposits of 24.3 per cent.

The net interest margin for the quarter stood at 4.3 per cent.

On the asset quality front, the gross non-performing assets (NPAs) as a percentage of gross advances as on March 31, 2020 improved to 1.26 per cent from 1.36 per cent at end of March 2019.

In absolute terms, the gross NPAs or bad loans were worth Rs 12,649.57 crore, compared to Rs 11,224.16 crore a year ago.

The net NPAs were at 0.36 per cent (Rs 3,542.36 crore), slightly lower from 0.39 per cent (Rs 3,214.52 crore).

The provisions for bad loans and contingencies for March quarter of FY20 were raised to Rs 4,216.50 crore on a consolidated basis, more than double from Rs 2,063.52 crore for corresponding period of 2018-19.

In line with RBI directions, the bank did not announce a dividend payout.

The Reserve Bank on Friday asked banks not to make any further dividend payouts from profits pertaining to financial year 2019-20, until further instructions, with a view that lenders must conserve capital in an environment of heightened uncertainty caused by Covid-19.

"Accordingly, the board of directors of the bank, at their meeting held on April 18, 2020, has not proposed any final dividend for the year ended March 2020," HDFC Bank said in the filing.

Further, it said the extent to which the Covid-19 pandemic will impact the bank's results will depend on future developments, which are highly uncertain, including among other things, any new information concerning the severity of the disease and any action to contain its spread or mitigate its impact whether government-mandated or elected by the bank.

The Mumbai-headquartered lender also said that it has extended the three month moratorium till May 2020, as per RBI instructions, to its borrowers for payment of installments or interest, as applicable.

For all such accounts where the moratorium is granted, the asset classification shall remain at stand still during the moratorium period.

HDFC Bank said it has also held provisions against the potential impact of Covid-19 in excess of prescribed RBI norms.

"The total provisions for the current quarter included credit reserve relating to Covid-19 in the form of contingent provisions of approximately Rs 1,550 crore," it said.

HDFC Bank said during the quarter, there was a considerable slowdown in economic activities following the outbreak of Covid-19.

"Furthermore, with the government initiating lockdown in the latter half of March, and our strict adherence to social distancing, not only did we see an impact on business volumes -- in terms of loan originations, distribution of third party products, and payments product activities, but we also could not optimise our collection efforts, and as a result of which fees/other income were lower by Rs 450 crore," it said.

On capital adequacy, bank said its total capital adequacy ratio (CAR) as per Basel III guidelines was at 18.5 per cent on March 31, 2020, as against a regulatory requirement of 11.075 per cent.

Tier-1 CAR was at 17.2 per cent as of March 31, 2020, compared to 15.8 per cent on March 31, 2019.