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HDFC Bank Balance Sheet Shrinks, But Profit Growth Continues
HDFC Bank Balance Sheet Shrinks, But Profit Growth Continues
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CONSISTENT GROWTH
The bank's net profit gained 33% in the December quarter.
N e t D r o f i t % chanae v - o - v
2005
2006
2007
2008
2009
2010
Source: Capitaline
shrunk by 1.6%, or ^3,119 crore, during the three months, again lagging the 5.6% growth for the sector. However, HDFC Bank has been able to beat Street
The lender's capital adequacy ratio stood at 16.3% on 31 Dec, well above the 9% stipulated by the central bank
estimates, helped by curtailing operating expenses growth rate along with a rise in fee income. In the December quarter, too, low-cost Casa (current and savings account) deposits account for half the total, helped by a 30.7% increase in savings bank deposits from a year ago. Operating expenses grew only 22%. Consequently, operating profit gained by nearly one-third over a year ago. Net interest income grew 25% from last year and 9.9% from the September quarter. The bank sustained net interest margins at 4.2% from the September quarter. Asset quality is also improving. Net non-performing assets as percentage of net advances shrunk to 0.2% in the three m o n t h s ended December, from 0.3% at the end of the September quarter. Its capital adequacy ratio stood at 16.3% on 31 December, well above the 9% stipulated by the Reserve Bank of India. HDFC Bank's share has followed the broader Bankex index of the Bombay Stock Exchange, losing some 1 0 % since December, when liquidity problems came to the fore. But despite these pressures, the m a n a g e m e n t says that credit costs are coming down, liquidity is easing and the bank will grow faster than the industry. That should sustain some buying interest in the stock despite it trading at 3.29 times its fiscal 2012 book value.
RAVI KRISHNAN