India's HDFC Bank Q4 profit rises 18 pct, bad loans stable


UPDATE 1-India's HDFC Bank Q4 profit rises 18 pct, bad loans stable

* Net profit 39.9 bln rupees vs 39.56 bln rupees estimate
    * Bad loan ratio sequentially stable at 1.05 pct, provisions
    * Shares rise more than 1.5 pct after results

 (Adds details of results, share price)
    MUMBAI, April 21 (Reuters) - HDFC Bank <HDBK.NS>, India's
second-biggest lender by assets, reported a slightly
better-than-expected 18.3 percent rise in fourth-quarter net
profit on higher interest and fee income, while keeping its
bad-loan ratio stable quarter-on-quarter.
    Net profit was 39.9 billion rupees ($617.60 million) for the
three months to March 31, compared with 33.74 billion rupees
reported a year ago, HDFC Bank, the nation's most valuable
lender, said on Friday.
    Analysts, on average, had expected a net profit of 39.56
billion rupees, according to data compiled by Thomson Reuters.
    Gross bad loans as a percentage of total loans, at 1.05
percent, were little changed from end-December, although higher
than 0.94 percent a year earlier.
    Provisions, including for loan losses, jumped, however.
    Loan-loss provisions were 9.78 billion rupees in the March
quarter, nearly doubling from 4.9 billion rupees a year earlier,
as the bank accounted for loan defaults that were not recognised
as such in the December quarter after the central bank
temporarily relaxed rules to help businesses weather a shock
banknote ban. [nI8N10N01V]
    Banks are also recovering from the government ban of
high-value banknotes in November that hit their usual business
as they scrambled to exchange older notes, and also weakened
credit demand.
    The government and the sector regulator are also tightening
rules around recognition and resolution of bad loans, with total
stressed loans in the sector hitting almost $150 billion as of
    HDFC Bank, with its stronger retail business and relatively
smaller exposure to project finance, has far lower bad loans
than its bigger rivals and has been an investor favourite.
    Its advances grew 19.4 percent in the year to end-March, the
lender said, helping a 21.5 percent rise in fourth-quarter net
interest income from a year ago. Net interest margin for the
quarter was 4.3 percent.
    Non-interest income including fees and commissions grew 20.3
percent in the March quarter, the Mumbai-headquartered lender
    Shares in HDFC Bank, which has a market capitalisation of
about $58 billion, were trading 1.6 percent higher by 0815 GMT
in a Mumbai market <.NSEI> that was down 0.2 percent.
($1 = 64.6050 Indian rupees)

 (Reporting by Devidutta Tripathy; Editing by Muralikumar
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