HDFC Bank's Q2 profit rises 20%; asset quality steady

India’s second largest and the most valuable bank by market capitalisation has posted a stable set of Q2 earnings on Tuesday, October 25. Profits for the quarter have seen a jump of 20 per cent to Rs 3455 crore as against Rs 2869 crore in the corresponding quarter of last fiscal.

Net interest income, the difference between interest earned and interest expended has increased by 19.6 per cent YoY to Rs 7,993 crore in July-September quarter, which missed estimates due to lower-than-expected loan growth.

Loan growth for the quarter stands at 18.1 per cent against analysts' estimates of 22-23 per cent. Net interest margin (NIMs) have remained steady at 4.2 per cent on a yearly basis but have sequentially declined by 20 basis points from 4.4 per cent.

Provisions for bad loans have dropped 13.5 per cent year-on-year to Rs 749 crore in Q2, but have sequentially increased 10 per cent. Decrease in provisioning augurs well for the bank representing a better future in terms of asset quality.

Asset quality is stable during the quarter with gross non-performing assets as a percentage of gross advances having fallen to 1.02 per cent from 1.04 per cent and net NPAs down to 0.3 per cent from 0.32 per cent on a sequential basis.

Shares of HDFC Bank are trading flat with negative bias at Rs 1255.55 on NSE.