HDFC Bank today reported its lowest profit growth of 21.1 per cent in over 10 years in the first quarter of this fiscal as net interest margin dropped slightly.
HDFC Bank reported Rs 2,233 crore profit against Rs 1,844 crore in the April-June quarter of 2013-14.
The bank attributed the fall in profit to a 20-basis point dip in net interest margin (NIM), which declined to 4.4 per cent in the reporting quarter.
However, total income jumped to Rs 13,070.7 crore from Rs 11,588.56 crore in the year-ago period.
"NIM in the first quarter was stable sequentially, but on a y-o-y basis it has dropped slightly. If you look at our range of NIM, it has been around 4.1-4.4 percent. It would be at the upper end of the range going forward," HDFC Bank Deputy Managing Director Paresh Sukthankar told reporters here.
Interest earned rose 16.1 percent to Rs 11,220.1 crore from Rs 9,663 crore last year same period.
"HDFC’s NII grew 17% YoY (marginally ahead of expectations) on back of healthy NIM (4.4%; stable QoQ) and 20.7% loan growth. However, PAT was marginally lower on muted other income largely due to subdued forex as well as trading gains despite moderate rise in opex and lower provisions. Loan book was largely driven by strong growth in overseas as well as domestic wholesale portfolio. Moderate growth in retail portfolio (7% YoY), led to decline in share of retail book from 54% in Q4FY14 to 52% in Q1FY15. Nonetheless, slight disappoint came on rise in NPLs - gross and net NPAs rose 12.3% and 22.9% (QoQ), respectively, in absolute terms. However, it is still comfortable at 1.1% and 0.3%, respectively, in percentage terms," says Saday Sinha, banking analyst, Kotak Securities.
Net interest income, which is the interest earned minus interest paid, during the period grew 17 per cent to Rs 5,171.6 crore he said. It accounted for 74 per cent of net revenue.
The asset quality slightly deteriorated with gross non-performing assets (NPAs) at 1.07 per cent as against 1.04 per cent, while net NPA was stable at 0.3 per cent.
"The three-four basis points increase in NPAs has happened from agriculture, SME and a little bit on retail, including commercial vehicles and commercial equipment businesses. There is not a large particular segment which showed any material deterioration," Sukthankar said, adding