The Hindu Business Line : 30% rise in HDFC Bank Q1 net

HDFC Bank's net profit rose 30.4 per cent to touch Rs 239.3 crore for the first quarter ended June, 30, 2006, against Rs 183.53 crore in the same quarter last year.

The rise in profit was mainly on account of strong growth in net interest income (NII) and high net interest margin (NIM) despite increasing interest rates, said Mr Paresh Sukhthankar, Head, Credit and Market Risk.

Total income was Rs 1,855.08 crore (Rs 1,157.68 crore). NII increased by 56.1 per cent to Rs 817.63 crore (Rs 523.69 crore). Other income increased to Rs 350.79 crore (Rs 263.55 crore).

"NII, which showed strong growth, was the largest component of our revenues. We were also able to maintain NIM at 4 per cent. In the last two quarters most banks have seen some erosion in their NII. In other income, the main driver was fees and commission, which increased by 35 per cent," Mr Sukhthankar said.

Income from fees and commissions was Rs 290.6 crore (Rs 215.2 crore) and from foreign exchange and derivatives it was Rs 55.8 crore (Rs 23.8 crore). However, the bank recorded a loss of Rs 2.3 crore on sale investments against a profit of Rs 23.4 crore last year.

Total expense increased to Rs 1,239.38 crore (Rs 728.45 crore).

The bank's capital adequacy ratio was 11.7 per cent (11.9 per cent).

The ratio of net non-performing assets to net assets was 0.4 per cent.

Provisions increased to Rs 263.87 crore (Rs 165.85 crore). "Higher provisioning is partly because of amortization of premium because of the `Held to Maturity' portfolio and partly because of RBI guidelines. It will continue to remain on the higher side, in line with growth," Mr Sukhthankar said.

According to banking analysts, the cost of amortization could be high for those banks that have been buying premium bonds with higher coupon in order to sustain NIM.

Total deposits increased by 58.1 per cent to touch Rs 60,630 crore (Rs 38,354 crore). Total advances grew by 40.1 per cent to Rs 45,764 crore (Rs 32,665 crore).

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