Net interest income for the quarter ended 31 December 2020 grew by 15.1% to 16,317.6 crore from 14,172.9 crore for the quarter ended 31 December 2019, driven by advances growth of 15.6%, and a core net interest margin for the quarter of 4.2%. The bank's focus on deposits helped in maintaining a healthy liquidity coverage ratio at 146%, well above the regulatory requirement.
Profit before tax in Q3 December 2020 stood at Rs 11,771.89, up by 18.9% from Rs 9,901.85 crore in Q3 December 2019. Tax expense increased by 21.3% YoY to Rs 3,013.60 crore in the third quarter.
On the asset quality side, gross non-performing assets (NPAs) stood at Rs 8,825.56 crore as on 31 December 2020 as against Rs 11,304.60 crore as on 30 September 2020 and Rs 13,427.25 crore as on 31 December 2019.
The ratio of gross NPAs to gross advances stood at 0.81% as on 31 December 2020 as against 1.08% as on 30 September 2020 and 1.42% as on 31 December 2019.
The ratio of net NPAs to net advances stood at 0.09% as on 31 December 2020 as against 0.17% as on 30 September 2020 and 0.48% as on 31 December 2019.
The bank's provisions and contingencies rose by 12.2% to Rs 3,414.13 crore in Q3 FY21 over Q3 FY20. The bank held floating provisions of Rs 1,451 crore and contingent provisions of Rs 8,656 crore as on 31 December 2020. Total provisions were 260% of the reported Gross NPAs or 148% of proforma Gross NPAs as on 31 December 2020.
Pre-provision Operating Profit (PPOP) improved by 17.3% Rs 15,186.02 crore in the third quarter as compared to the corresponding quarter of the previous year.
The total credit cost ratio was at 1.25% in the quarter ending 31 December 2020 as compared to 1.41% in the quarter ending 30 September 2020 and 1.29% in the quarter ending 31 December 2019.
Total advances as of 31 December 2020 were Rs 10,82,324 crore, an increase of 15.6% over 31 December 2019. Total deposits as of 31 December 2020 were Rs 12,71,124 crore, an increase of 19.1% over 31 December 2019. CASA deposits grew by 29.6% with savings account deposits at Rs 374,639 crore and current account deposits at Rs 172,108 crore. CASA deposits comprised 43% of total deposits as of 31 December 2020.
The bank's total Capital Adequacy Ratio (CAR) as per Basel lll guidelines was at 18.9% as on 31 December 2020 (18.5% as on 31 December 2019) as against a regulatory requirement of 11.075%.
HDFC Bank said that the impact of COVID-19, including changes in customer behaviour and pandemic fears, as well as restrictions on business and individual activities, has led to significant volatility in global and Indian financial markets and a significant decrease in global and local economic activity, which may persist. While there has been a gradual pickup in economic activity since the easing of lockdown measures, the continued slowdown led to a decrease in loan originations, the sale of third-party products, the use of credit and debit cards by customers and the efficiency in collection efforts.
The slowdown may lead to a rise in the number of customer defaults and consequently an increase in provisions there against. The extent to which the COVID-19 pandemic will continue to impact the bank's results will depend on ongoing as well as future developments, which are highly uncertain, including, among other things, any new information concerning the severity of the COVID-19 pandemic and any action to contain its spread or mitigate its impact whether government-mandated or elected by the bank.
The bank holds provisions as at 31 December 2020 against the potential impact of COVID-19 based on the information available at this point in time. The provisions held by the bank are in excess of the RBI prescribed norms.
The Supreme Court of India, in a public interest litigation vide an interim order dated 03 September 2020, has directed banks that accounts which were not declared NPA till 31 August 2020 shall not be declared as NPA till further orders.
If the bank had classified borrower accounts as NPA after 31 August 2020, the bank's proforma Gross NPA ratio and proforma Net NPA ratio would have been 1.38% at 31 December 2020 (at 30 September 2020: 1.37%) and 0.40% at 31 December 2020 (at 30 September 2020: 0.35%), respectively.
As of 31 December 2020, HDFC Bank had a distribution network of 5,485 branches and 15,541 ATMs / Cash Deposit & Withdrawal Machines (CDMs) across 2,866 cities / towns.
Shares of HDFC Bank shed 0.12% to Rs 1466.35 on Friday (15 January 2021).
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