HDFC reports 21 per cent rise in Q1 profit, lags estimates

HDFC Bank Ltd, India's second-biggest private sector lender by assets, reported its slowest quarterly earnings growth in more than a decade on higher-than-expected provisions. The quarterly profits rose by 21 per cent, lagging estimates, although asset quality remained stable.

The Mumbai-based bank said net profit rose to Rs 2,233 crore ($371 million) for its fiscal first quarter to end-June from Rs 1,844 crore a year earlier.

Analysts had on average forecast a net profit of Rs 2,321 crore, according to Thomson Reuters data. Weaker economic expansion squeezed the credit growth for Indian lenders, which slowed their earnings growth in recent quarters.

The sector is betting on a revival in economic activity after the new government led by Prime Minister Narendra Modi took power in May. 

According to Thomson Reuters StarMine SmartEstimates, Indian banks are expected to report a net income growth of about 22.2 per cent in the next 12 months, which would be the second-fastest earnings growth in the sector in Asia Pacific after South Korea.

HDFC Bank, which outperformed rivals with consistently high profit growth of about 30 per cent and stable asset quality, had seen profit growth weaken in the past quarters.

Provisions for the June quarter increased to Rs 483 crore from Rs 286 crore in the previous quarter. Net non-performing loans as a percentage of net advances remained stable at 0.3 per cent. Net interest margin fell to 4.4 per cent from 4.6 per cent a year earlier.

Shares of HDFC Bank, valued at more than $33 billion, were up 0.7 per cent by 11:22 a.m. The stock is up almost 27 per cent so far this year. The Indian banking sector index has gained more than 36 per cent the highest in Asia Pacific. 

(Reuters)