HDFC Bank Q1 FY2019-20 Results Update

HDFC Bank Q1 FY20 Financial Highlights

Introduction

In this article, we are going to see HDFC Bank Q1 FY2019-20 results. HDFC Bank has seen a growth of 21% Y-o-Y in the net profit for the June quarter.

HDFC Bank Q1 FY2019-20 Results Update

Q1 FY2019-20 Results

1. Net Interest Income (NII)
   • NII is the difference between the interest earned and the interest expended. NII is the core or basic source of income for any bank.
   • For Q1 FY20, NII of HDFC bank is Rs.13,294.3 Cr, grew by 22.9% y-o-y from Rs.10,813.6 Cr in Q1 FY19 last year. The growth in NII is 1.6% q-o-q as compared with NII of Rs.13,089.5 Cr in Q4 FY19.
   • Thus, a consistent growth is seen in NII of Bank y-o-y as well as q-o-q. The contribution of NII was 73% of Total revenue.
2. Non-Interest Income
   • Non-Interest Income is the income from corporate banking fees, trade/remmitance, processing fees, third party sale, transaction fees etc.
   • Non-Interest Income for Q1 FY20 is Rs.4,970.3 Cr from Rs.3,818.1 Cr in Q1 FY19 ie. increased by 30.2% y-o-y. While as compared with last quarter, it is increased by 2% from Rs.4,871 Cr in Q4 FY19.
   • Thus, this q-o-q and y-o-y growth in Non-Interest Income can be seen as a positive sign for the bank.
   • The contribution of Non-Interest Income (other income) was 27% of Total revenue. The detailed growth of key components of Non-interest income is described in the below table :

Total Net Income

• Total Net Income has increased by 22.7% y-o-y Cr from Rs.26,367 Cr (Q1 FY19) to Rs.32,361.8 Cr in Q1 FY20.
• As compared with Q4 FY19, Total Net Income has increased by 3.7% from Rs.31,204 Cr, which is a good signal towards for the bank’s total net income.

Operating Profit

• The Operating profit for Q1 FY20 is Rs.11,147 Cr which is grown by 29% y-o-y from Rs.8,648 Cr, in Q1 FY19.
• On the other hand, a growth of almost 2.8% q-o-q is seen in Q1 FY20 as compared with Q4 FY19 (Rs.10,843 Cr).
• Thus, operating profits are increasing continuously on y-o-y as well as q-o-q basis.

Provisions & Contingencies

• For the quarter Q1 FY20, Provisions and contingencies were Rs.2,613.7 Cr with a Y-o-Y growth of 60.4% as against Rs. 1,629.4 Cr for Q1 FY19.
• The key components of provisions are specific provisions, general provisions and floating provisions.General provisions include additional provisions for standard advances to the NBFC / HFC sector.

Net Profit

• Bank earned net profit of Rs.5,568.2 Cr for Q1 FY20, with an increase of 21% Y-o-Y over the quarter Q1 FY19 (Rs.4,601.4 Cr).
• While, as compared with last quarter numbers (Q4 FY19), net profit has decreased by 5.4% q-o-q from Rs.5,885 Cr, on account of increased provisioning.

Summary of Balance sheet & Key Ratios

Balance sheet Summary

• Total balance sheet size as of Q1 FY20 was Rs.12,65,253 Cr as against Rs.10,80,409 Cr as of June 30, 2018, with a growth of 17%.
• For Q1 FY20, Advances, Total Deposits and CASA deposits have seen a y-o-y growth of 17.1%, 18.5% and 12.8% respectively as compared with the respective numbers in Q1 FY19.
• While if the q-o-q growth is concerned, Advances, Total Deposits and CASA deposits have increased by 1.3%, 3.4% and 3.2% respectively.
• CASA ratio of 40% indicates that CASA deposits comprises 40% of total deposits as of June 30, 2019.
• Bank’s continued focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 126%, well above the regulatory requirement.

Key Ratios

1. Gross NPA & Net NPA
   • Gross non-performing assets were at 1.40% of gross advances in Q1 FY20 as against 1.33% in Q1 FY19 and 1.36% in Q4 FY19.
   • While Net non-performing assets were at 0.43% of net advances in Q1 FY20 as against 0.41% in Q1 FY19 and 0.39% in Q4 FY19.
2. Capital Adequacy Ratio (CAR)
   • HDFC Bank’s total Capital Adequacy Ratio (CAR) as per Basel III guidelines was at 16.9% as on June 30, 2019 (14.6% as on June 30, 2018) as against a regulatory requirement of 11.075%.
   • CAR has reduced to 16.9% in Q1 FY20 from 17.1% in Q4 FY19.
3. Net Interest Margin
   • Net Interest Margin (NIM) and the asset growth, both drives the Net Interest income of the bank.
   • NIM for the quarter Q1 FY20 is 4.3%, which is improved from 4.2% in Q1 FY19 and decresed from 4.4% in Q4 FY19.