Though NPAs showed an uptick in the April-June quarter, they do not reflect any major stress on HDFC Bank?s balance sheet, says Paresh Sukthankar, executive director of the bank. In a conference call with reporters, Sukthankar discusses HDFFC Bank?s first quarter results and the impact of Reserve Bank of India?s recent liquidity measures.
While net profit for the quarter rose 30% year-on-year, it has fallen slightly on a sequential basis. Your comments?
This is a seasonal thing. If you look at it, every year the last quarter is at the peak and, again, you start off at the first quarter building up. There is nothing to read into this.
The bank?s NPAs have risen in absolute terms on a sequential basis. Where is the stress coming from and what is your outlook?
We had about R380 crore worth of gross NPAs during this quarter. Exactly 55% of the gross NPA creation is retail and there are a couple of corporate accounts that make up the rest. Within retail, we have had some increase in bad loans from the commercial vehicle and construction equipment piece during the last few quarters. The situation has not got much worse or improved but has continued in this quarter as well. On the corporate side, there are a couple of names. The environment remains challenging in terms of macro growth rate, and so on. I don?t see any particular stress in our portfolio. We continue to look at the situation cautiously.
Are you looking at going slow on the commercial vehicle and construction equipment side as stress mounts?
For those segments of the CV and CE portfolio that might have shown some stress, we have already tweaked our norms to be a little more cautious. But it does not mean that we are not going to grow that business.
Your retail loan growth has been consistently better than the wholesale side. Do you think this trend will continue?
The growth on the retail lending side, which has been slightly better, reflects that, so far, the domestic consumption side of the economy has been holding up very well. I would say that though individual products may show a slightly slower growth, but on an overall basis, unless we have a sharp recovery on the capex side by the end of the year, it is quiet likely that the retail piece will outpace the corporate, wholesale side. If we do have a recovery in the economy and grow at around 5.5-6%, then we will have a pick-up in the corporate loan book.
Looking at RBI?s steps on curbing easy liquidity, what would be the impact on your bank?
There is no particular impact except what is likely to be for the banking sector as a whole. The bond yields have risen sharply, so to the extent, if there is any bond portfolio that is in the available-for-sale (AFS) or trading portfolio, that would see a mark-to-market loss. Beyond that, there is really nothing major. From a funding point of view, we are largely deposit funded, so it is okay. Approximately 25% of our statutory liquidity ratio (SLR) requirements are in the AFS or trading. Rest tend to be in the held to maturity (HTM) portfolio.
