HDFC Bank increases provisions for bad loans as impact of COVID-19 continues to bear down in second quarter

• HDFC Bank registered a 15% uptake in revenue and over 18% jump in net profits in the second quarter as compared to last year.
• It also continued to increase provisions, bolstered by an increase in deposits.
• HDFC Bank shows lower retail loans, drop in collections and waivers and limit the use of debit and credit cards.

HDFC Bank’s revenues are up by nearly 15% in the second quarter as compared to the same period in the previous year at ₹21,868.8 crore and net profit has increased by 18.4% to ₹7,513.1 crore.

“Driven by asset growth of 21.5% and a core net interest margin for the quarter of 4.1%,” said the bank in a statement.

Provisions remain above the Reserve Bank of India’s requirement at 153% — amounting to around ₹3,703.5 crore — boosted by a healthy growth in deposits. They grew by 20.3% between July and September amounting to ₹12.29 lakh crore.

Gross NPA ratio	1.08%
Net NPA ratio	0.17%

HDFC Bank’s share price was trading 2% higher on Friday, a day ahead of its earnings. However, so far this year, the stock has registered an overall loss of 6%.


COVID-19 continues to affect HDFC Bank
The impact of COVID-19 was lower this quarter, but did still bear an impact. “While the previous quarter largely bore the brunt of COVID-19 pandemic, some of the softness continued into the current quarter leading to lower retail loan origination,” said HDFC Bank in a statement.

Use of debit and credit cards was lower as well the efficiency in collection efforts and waivers of certain fees — by approximately ₹ 800 crore.