HDFC Bank net profit rises 24% to Rs 26,257 crore in FY20; asset quality improves

Private lender HDFC Bank on Saturday reported a 24.6 per cent year-on-year growth in its net profit at Rs 26,257.3 crore for the financial year ended March 31, 2020, driven by rise in other income, operating income, NII and lower tax cost.

The Mumbai-headquartered bank had posted net profit of Rs 21,078.14 crore in the financial year 2018-19, HDFC Bank said in a filing to the Bombay Stock Exchange.

Net revenues (net interest income plus other income) jumped 20.6 per cent to Rs 79,447.1 crore in FY20 versus Rs 65,869.1 crore in FY19. The net interest margin (NIM) stood at 4.3 per cent as against 4.19 per cent in the year-ago period.

The cost to income ratio for the financial year ended March 31, 2020 stood at 38.6 per cent compared to 39.7 per cent in the previous fiscal year.

On the asset front, HDFC Bank's asset quality improved during FY20, with gross non-performing assets (NPAs) ratio rising to 1.26 per cent versus 1.36 per cent in the year-ago period. Net NPA stood at 0.36 per cent as compared to 0.39 per cent in FY19.

For the fourth quarter ended March 31, 2020, HDFC Bank reported a 17.72 per cent year-on-year rise in net profit at Rs 6,927.69 crore compared to Rs 5,885.12 crore a year ago. On a quarterly basis, however, its net profit lower than Rs 7,416.48 crore as on December 31, 2019.

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Net interest income, the difference between interest earned and interest expended, was up 16.15 per cent YoY to Rs 15,204.06 crore in Q4 FY20, while net interest margin stood at 4.3 per cent during March quarter of FY20.

For Q4FY20, net revenues increased 18.2 per cent YoY to Rs 21,236.6 crore, while other income (non-interest income) rose 23.84 per cent YoY to Rs 6,032.57 crore.

Provisions and contingencies rose sharply by 24.34 per cent on quarter-on-quarter basis to Rs 3,784.49 crore."Total provisions for the March quarter included credit reserves relating to COVID-19 in the form of contingent provisions of approximately Rs 1,550 crore," the bank said.

HDFC Bank in its BSE filing said that there was a considerable slowdown in the economic activities following the outbreak of COVID-19. The coronavirus lockdown imposed by the government had impacted not only business volumes, but it also affected its collection efforts and as a result of this fees/other incomes were lower by Rs 450 crore for the quarter, the bank said.

The bank said that its board has not proposed any final dividend for the year ended March 31, 2020, in line with the Reserve Bank of India (RBI's) instruction to conserve capital in an environment of heightened uncertainty caused by COVID-19.

The Reserve Bank of India on April 17 had decided that banks shall not make any further dividend payouts from profits pertaining to the financial year ended March 31, 2020 until further instructions, in wake of coronavirus-led economic crisis.