HDFC Bank Q1 Results: PAT Beats Estimates Despite Higher Provisions

Despite higher provisions, HDFC Bank reported a standalone profit after tax was at Rs 18,160 crore, up over 12% on year, exceeding the consensus estimates of analysts polled by Bloomberg, which pegged it at Rs 17,652 crore.

Provisions and contingencies against bad loans rose to Rs 14,441 crore as against Rs 2,602 crore a year ago. Ostensibly, the bank utilised proceeds from the initial public offering of its arm HDB Financial Services to make floating provisions, also described as additional prudential provisions against bad loans. The floating provision stood at Rs 9,000 cr during the quarter.

The bank received a net gain of Rs 9,128 crore on account of the sale of shares of HDB Financial before tax and net of the estimated related expenses for the initial public offering.

Asset quality of the bank worsened slightly, gross non-performing assets ratio rose to 1.4% at the end of June quarter compared with 1.33% in the previous quarter. Net NPA also rose 0.47% from 0.43% in the March quarter.

The bank's net interest income rose 5% on a year on year basis.

The core margin, or net interest margin, contracted to 3.35% from 3.46% in the quarter ended March. This was anticipated given the reduction in policy interest rates by the central bank this year.

Overall, loan book grew nearly 7% on year to Rs 26.53 lakh crore. Within this, retail loans grew by 8.1% on year, small and mid-market enterprises loan book rose by 17.1% on year and corporate and wholesale loans rose by merely 2%.

The bank's average deposits were at Rs 26.57 lakh crore, up 16.4% on year.