HDFC Bank reported an 18% year-on-year (year-on-year) growth in net profit for the quarter ended March to Rs 6,928 crore due to a 15% year-on-year increase in total earnings up to Rs 35,918 crore, with non-interest earnings growing 24% yoy. However, the bank’s provisions skyrocketed more than 100% yoy to Rs 3,784 crore.
The board of the largest private sector private sector lender, HDFC Bank, decided on Saturday which candidates would be best suited to succeed CEO and director Aditya Puri, whose names will be submitted to the RBI. The HDFC Bank board had appointed a search committee and also engaged external headhunters to find the candidate.
“The Bank’s Board of Directors today (Saturday) finalized the names of three candidates, in order of preference, for the position of bank CEO and chief executive officer (MD & CEO),” the bank informed the stock exchanges in a legal deposit. The intention did not go into who the three are. A media report leading up to the Saturday board meeting said the names of Sashidhar Jagdishan, Kaizad Bharucha and Sunil Garg are the ones who made the cut.
Jagdishan and Bharucha are the internal candidates and have served the bank for many years, while Garg is currently working with the American bank Citi. Meanwhile, the bank has also announced that Jagdishan and Bhavesh Zaveri, who is in charge of the operations, have resigned as additional directors, following instructions from the RBI to suspend their appointments until a new MD and CEO take the lead. Both have resigned from the position of additional director and the board of the bank has accepted the same, the lender said.
In a statement, HDFC Bank said on March 31 that it will hold provisions against the potential impact of COVID-19 based on currently available information, and it exceeds regulatory standards. “The bank had current provisions of Rs 1,451 crore and contingent provisions of Rs 2,996 crore as of March 31, 2020. Total provisions (consisting of specific, current, contingent and general provisions) amounted to 142% of gross non-performing loans as of March 31 , 2020 ‘, said the bank.
The bank saw the lockdown fail in the second half of March, with a slowdown in lending and cross-selling of other products, management said.
“We are continuing our strategy to build deposits to maintain a strong liquidity situation,” Finance Director Srinivasan Vaidyanathan told analysts. In the second half of March, card spending was 35% lower than the average of January and February spending. Collections were affected by the lock, and recoveries were affected by about 100 rupees, Vaidyanathan said.
The bank’s net interest income (NII), or the difference between interest earned and interest issued, increased 16% year-on-year to Rs 15,204 crore.
Core net interest margin (NIM) in Q4 increased from 4.2% at the end of December to 4.3%.
Asset quality performance improved: gross NPA ratio decreased 16 basis points (bps) consecutively to 1.26% and net NPA ratio decreased 12 bps to 0.36%.
Total advances increased by 21% year-on-year to Rs 9.94 lakh crore at the end of March. Retail loans made up 51% of the loan portfolio, while 49% came from wholesale loans. Growth came from both the retail and wholesale segments, which grew by 14.6% and 29% respectively.
Total deposits as of September 30 were Rs 11.47 lakh crore, up 24% from March 31, 2019. Current account deposits (CASA) were up 24% yoy, with SA deposits at Rs 3.1 lakh crore and CA deposits at Rs 1.74 lakh crore. Term deposits amounted to Rs 6.63 lakh crore, an increase of 24.6% over the previous year. The CASA ratio improved from 39.5% at the end of December to 42.2%.
HDFC Bank’s total capital adequacy ratio (CAR) under the Basel III guidelines was 18.5% at March 31, 2020, an increase of 17.1% at March 31, 2019 and a legal requirement of 11.075%. The CAR includes a capital conservation buffer (CCB) of 1.875% and an additional requirement of 0.2% because the bank is classified as a domestic systemically important bank (D-SIB). Tier 1 CAR on March 31, 2020 was 17.2%, compared to 15.8% on March 31, 2019. The Core Tier 1 (CET 1) ratio was March 16.4%. Risk weighted assets were at Rs 9.95 lakh crore, up from Rs 9.32 lakh crore on March 31, 2019.
The bank’s NBFC subsidiary, HDB Financial Services, posted a net profit of Rs 7,280 crore in the fourth quarter, up 15.5% year-on-year. Consolidated advances increased by 20.1% to Rs 10.44 lakh crore on March 31, 2020, from Rs 8.69 lakh crore on March 31, 2019.