The core fee income of the bank has posted sharp recovery on sequential basis for second straight quarter recovering back to pre-covid levels and also posted double growth for Q3FY21 over a year ago level.

The business growth of the bank was nearly steady at 17% with stable growth in deposits as well as advances growth, while the bank has improved credit deposit ratio 85.1% end December 2020.

The advances growth of the bank was steady on sequential basis at 16% end December 2020. The retail loan growth was moderate at 5%, while the corporate loan growth was robust at 27% end December 2020.

The Net Interest Margins (NIMs) of the bank improved on sequential basis to 4.2% in Q3FY2021 from 4.1% in the previous quarter and remained stable from 4.2% in the corresponding quarter last year. The bank has exhibited sharp improvement in CASA deposits ratio to 43% end December 2020.

Asset quality improves: The bank has improved stable asset quality with the decline in net NPA ratio in the quarter ended December 2020.

GNPA ratio declined to 0.81% of gross advances and NNPA ratio dipped to 0.09% of net advances end December 2020.

Supreme Court has directed that accounts which were not declared NPA till 31 August 2020 shall not be declared as such until further orders.

However, if the Bank had classified borrower accounts as NPA after August 31, 2020 using its analytical models (proforma approach), the proforma Gross NPA ratio would have been 1.38% end December 2020, as against 1.37% end September 2020 and 1.42% end December 2019.

The Bank's proforma Net NPA ratio would have been 0.40%.

Pending disposal of the case, the Bank, as a matter of prudence, has made a contingent provision in respect of these accounts. The Bank also continues to hold provisions end December 2020 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 1451 crore and contingent provisions of Rs 8656 crore end December 2020. Total provisions (comprising specific, floating, contingent and general provisions) were 260% of the reported Gross NPAs or 148% of proforma Gross NPAs end December 2020.

The restructuring under RBI resolution framework for COVID-19 was approximately 0.5% of advances.

CRAR stands at 18.9% with Tier 1 CAR at 17.6% end December 2020. Common Equity Tier 1 Capital ratio was at 16.8% end December 2020.

Risk weighted assets increased 15% to Rs 1,091,721 crore end December 2020 from Rs 950,976 crore end December 2019.

Business highlights

The balance sheet size of the bank increased 19% to Rs 1654228 crore end December 2020 as against Rs 1395336 crore end December 2019.

Total deposits increased 19% to Rs 1271124 crore end December 2020. CASA deposits grew by 30% with savings account deposits at Rs 374639 crore and current account deposits at Rs 172108 crore. Time deposits moved up 12% to Rs 724377 crore. CASA deposits improved to 43.0% of total deposits end December 2020.

Advances moved up 16% to Rs 1082324 crore end December 2020. Domestic advances grew by 15%. Domestic retail loans grew by 5% and domestic wholesale loans grew by 26%. The domestic loan mix between retail:wholesale was 48:52. Overseas advances constituted 3% of total advances.

The Bank's distribution network was at 5,485 branches and 15,541 ATMs / Cash Deposit & Withdrawal Machines (CDMs) across 2,866 cities / towns end December 2020. About 50% of our branches are in semi-urban and rural areas.

In addition, the bank has 13,675 business correspondents, which are primarily manned by Common Service Centres (CSC) as against 3,563 business correspondents end December 2019. Number of employees were at 117,560 end December 2020 as against 113,981 end December 2019.

Quarterly performance

Net interest income increased 15% to Rs 16317.6 crore in Q3FY2021 from Rs 14172.9 crore in Q3FY2020, driven by advances growth of 16% and a core net interest margin of 4.2%.

Other income (non-interest revenue) increased 12% to Rs 7443.22 in Q3FY21 from Rs 6669.28 crore in Q3FY20. Fees & commissions moved up 10% to Rs 4974.9 crore, foreign exchange & derivatives revenue increased 7% to Rs 562.2 crore and gain on sale / revaluation of investments surged 64% to Rs 1109.0 crore. However, the miscellaneous income, including recoveries declined 15% to Rs 797.1 crore in Q3FY2021.

Bank's net total income grew 14% to 23760.8 crore for the quarter ended December 2020.

Operating expenses rose 9% to Rs 8574.8 crore, while cost-to-income ratio eased to 36.1% as against 37.9% for the corresponding quarter ended December 2019.

Pre-provision Operating Profit (PPOP) moved up 17% to Rs 15186.0 crore in Q3FY21. Provisions and contingencies Rs 3414.1 crore consisting of specific loan loss provisions of Rs 691.2 crore and general and other provisions of Rs 2722.9 crore in Q3FY21 as against Rs 3043.6 crore consisting of specific loan loss provisions of Rs 2883.6 crore and general and other provisions of Rs 159.9 crore in Q3FY20.

Total provisions for the current quarter include contingent provisions of approximately Rs 2400 crore for proforma NPA.

The total credit cost ratio was at 1.25%, as compared to 1.41% in Q2FY21 and 1.29% in Q3FY20.

Profit before tax (PBT) grew by 18.9% to Rs 11771.9 crore. After providing Rs 3013.6 crore for taxation, the Bank earned a net profit of Rs 8758.3 crore, an increase of 18.1% over Q3FY20.

Book Value per share stood at Rs 354.3per share at end December 2020, while adjusted Book value (adjusting for proforma net NPAs and 10% of restructured loans) was at Rs 345.5 per share at end December 2020.

Financial performance H1FY2021

For the nine months ended December 2020, the Bank earned a total income of Rs 108045.6 crore as against Rs 102155.8 crore in the corresponding period of the previous year. Net revenues (net interest income plus other income) for the nine months ended December 2020 were Rs 65370.4 crore, as against Rs 58210.4 crore for the nine months ended December 2019. Net profit for the nine months ended December 2020 was Rs 22930.0 crore, up 19% over the corresponding nine months ended December 2019.

HDFC Securities (HSL) is amongst the leading retail broking firms in India with 96.5% stake end December 2020. The company posted total income was Rs 337.3 crore as against Rs 216.3 crore for the quarter ended December 2019. Profit after tax for the quarter was Rs 166.6 crore, as against Rs 101.7 crore for the quarter ended December 2019. End December 2020, HSL had 219 branches across 160 cities / towns in the country.

HDB Financial Services (HDBFSL) is a non-deposit taking non-banking finance company ('NBFC') offering wide range of loans and asset finance products to individuals, emerging businesses and micro enterprises. End December 2020, the Bank held 95.1% stake in HDBFSL. The total loan book was Rs 57710 crore end December 2020 as against Rs 56748 crore as of December 2019. For the quarter ended December 2020, HDBFSL's net interest income was at Rs 1,010.4 crore as against Rs 995.3 crore for the quarter ended December 2019. Preprovision Operating Profit (PPOP) grew 8% yoy and 10% qoq Rs 748.7 crore. Provisions and contingencies were Rs 818.8 crore which included general provisions made as a matter of prudence. The net loss was Rs 44.3 crore in Q3FY21 compared with net profit of Rs 216.7 crore in Q3FY20. Gross NPA were 2.7% and net NPA 1.7%. Proforma NPA was 5.9% end December 2020 as against 5.1% end September 2020019. Total CAR was at 19.5% with Tier-I CAR at 13.9%. End December 2020, HDBFSL had 1,328 branches across 964 cities / towns.

Consolidated Financial Results

The consolidated net profit for the quarter ended December 2020 was Rs 8769 crore, up 15%, over the quarter ended December 2019. Consolidated advances grew by 15% from Rs 986606 crore end December 2019 to Rs 1133410 crore end December 2020. The consolidated net profit for the nine months ended December 2020 was Rs 23399 crore, up 17% over the nine months ended December 2019.

HDFC Bank: Results

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