HDFC Bank Q4FY18: Six key takeaways from the financial performance

A Bloomberg poll of analysts expected HDFC Bank's PAT to be around Rs 4,860 crore in Q4FY18.

A HDFC Bank branch. Photo: Reuters

Largest private lender HDFC Bank posted net profit of Rs 4,799.28 crore in fourth quarter ended March 2018, witnessing growth by 20.27% compared to net profit of Rs 3,990.09 crore in the corresponding period of the previous year. The bank's current net profit also increased by 3.37% as against Rs 4,642.60 crore of the preceding quarter.

However, despite reporting positive performance in Q4FY18, the bank missed analysts estimates in terms of bottom-line as a Bloomberg poll of analysts expected HDFC Bank's PAT to be around Rs 4,860 crore in Q4FY18.

HDFC Bank net interest income (NII) as on March 2018, came in at Rs 10,657.69 crore, registering growth of 17.70% and 3.32% in comparison with NII of Rs 9,055.10 crore in Q4FY17 and Rs 10,314.34 crore in Q3FY18 respectively.

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Here are five key takeaways from the HDFC Bank's result.

Provisions:

Provisions and contingencies for the guarter ended March 31, 2018 were Rs 1,541 .1 crore ( consisting of specific loan loss provisions Rs 1, 132.5 crore, general provisions Rs 153.4 crore, and other provisions , 255.3 crore) as against, Rs 1,261.8 crore (consisting of specific loan loss provisions Rs 977.9 crore, general provisions Rs 280.3 crore, and other provisions Rs 3.6 crore) for the quarter ended March 31, 2017. Profit before tax for the quarter ended March 31, 2018 was up 21.2% to Rs 7,294.6 crore.

Capital Adequacy:

The Bank's total Capital Adequacy Ratio (CAR) as per Basel Ill guidelines was at 14.8% as on March 31, 2018 (14.6% as on March 31, 2017) as against a regulatory requirement of 10.875% including Capital ConseNation Buffer of 1.875%. Tier 1 CAR was at 13.2% as of March 31, 2018 compared to 12.8% as of March 31, 2017. Common Equity Tier 1 Capital ratio was at 12.2% as of March 31, 2018. Risk-weighted Assets were at Rs 800,126 crore (as against Rs 640,030 crore as at March 31, 2017).

DIVIDEND:

The Board of _Directors recommended a dividend of Rs 13 per equity share of Rs 2 for the year ended March 31, 2018, as against Rs 11 per equity share of Rs 2 for the previous year. This would be subject to approval by the shareholders at the next annual general meeting.

NETWORK:

As of March 31, 2018, the Bank's distribution network was at 4,787 banking outlets and 12,635 ATMs across 2,691 cities I towns as against 4,715 banking outlets and 12,260 ATMs across 2,657 cities I towns as of March 31, 2017. Of the total banking outlets, 53% are in semi-urban and rural areas. Number of employees were at 88,253 as of March 31, 2018 (as against 84,325 as of March 31, 2017).

ASSET QUALITY:

Gross non-performing assets were at 1.30% of gross advances as on March 31, 2018, as against 1.29% as on December 31, 2017 and 1.05% as on March 31, 2017. Net nonperforming assets were at 0.4% of net advances as on March 31, 2018. The Bank held floating provisions of, 1,451 crore as on March 31, 2018.

Bonds:

The Board of Directors have approved the issue of Perpetual Debt Instruments (part of Additional Tier I capital), Tier II Capital Bonds and Long Term Bonds (financing of infrastructure and affordable housing) up to a total amount of up to a total amount of Rs 50,000 crore in the period of next twelve months through private placement mode, subject to the approval of the shareholders at the ensuing Annual General Meeting of the Bank and any other regulatory approvals as applicable.

The Bank's net profit for year ended March 31, 2018 was Rs 17,486.8 crore, up 20.2%, over the year ended March 31, 2017.

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