Private sector lender HDFC Bank on Tuesday reported steady growth in net profit for the quarter ended December 31 despite uncertainties due to the withdrawal of high value currency notes.
The second largest private sector lender reported 15.1% growth in net profit to Rs. 3865.3 crore — higher than what the street was expecting.
Net interest income (interest earned less interest expended) for the quarter grew by 17.6% to Rs. 8,309.1 crore, driven by average assets growth of 18.6% and a net interest margin for the quarter of 4.1%.
“The net interest margin came down by 10 bps both sequentially and year-on-year,” said Paresh Sukthankar, Deputy Managing Director, HDFC Bank in the post earnings teleconference with the media.
Other income of the lender grew by 9.4% to Rs. 3,142.7 crore which was aided by treasury gains Rs. 399 crore during the quarter.
“The absolute numbers do reflect the realty in the market,” Mr. Sukthankar said when asked impact on the note ban. He said the merchant discount rate (MDR) — which was waived for the consumers during November and December — was ‘meaningful amount.’ MDR is the fee banks earn when a customer uses their debit or credit card.
On the other hand, the cash ban show sharp increase in low cost deposit of the lender as the current and savings account deposits grew by 37%, which now constitutes 45% of the bank’s total deposit.
The bank’s loan growth also remained steady with domestic loan portfolio growing by 17.5%. The domestic retail loans and wholesale loans grew by 17.8% and 16.8% respectively, Mr. Sukthankar said.
The asset quality also remained stable with gross non-performing assets (NPAs) at 1.05% in December as against 1.02% as in September. Provisions and contingencies were Rs. 715.8 crore as against Rs. 653.9 crore in the year-ago period.