HDFC Bank Ups Profit - Analyst Blog

HDFC Bank’s (HDB) 2010 fiscal fourth quarter (ended March 31, 2010) net earnings of INR8.37 billion (US$188 million) were up 32.6% from the prior-year quarter, due primarily to a strong growth in net revenues and an improvement in asset quality, provisions and contingencies (primarily comprising loan loss provisions), which was partially offset by higher-than-expected operating expense.

 

HDFC Bank’s net interest income for the quarter increased 27% year-over-year to INR23,514 million, driving net interest margin (NIM) to 4.3%.

 

Non-interest revenue for the quarter was INR9035.5 million, down 18.9% from the prior-year quarter. While fees and commissions increased from the prior-year quarter, the company experienced a loss of INR473 million due to the revaluation/sale of investments in the quarter. The largest component of the non-interest revenue was fees and commissions of INR7,653 million, up 5.7% over the year-ago quarter.

 

HDFC Bank’s operating expenses for the quarter were INR15,605 million, up 11.8% from the year-ago quarter. Operating expenses were 47.9% of net revenues. Provisions and contingencies for the quarter were INR4,399 million, down 33.1% from INR6,574 million in the prior-year quarter.

 

Asset quality improved, with gross non-performing assets (NPAs) to gross advances decreasing 17 basis points (bps) from the prior quarter and 38 bps year-over-year to 1.43%. Net NPAs also remained healthy at 0.31% of net advances, down 14 bps from the prior quarter and 32 bps from year-ago quarter.

 

For full year ending March 31, 2010, net earnings increased 31.3% year-over-year to INR29.49 billion (US$6.63 billion). Total interest and non-interest income came in at INR199.8 billion, up 1.8% year-over-year.

 

HDFC Bank’s total capital adequacy ratio (CAR) as of March 31, 2010, (computed as per Basel 2 guidelines) remained strong at 17.4%, versus the regulatory minimum of 9%, higher than 15.7% recorded at March 31, 2009. Tier-I CAR was 13.3% as of December 31, 2009.

 

 

For the year ended March 31, 2010, the board of HDFC has recommended an increase in the annual dividend to INR12 per share from INR10 per share in the previous year. The increase is subject to approval.