On Monday, HDFC Bank (HDB: 148.12 -0.47 -0.32%) reported fiscal first quarter 2011 (ended June 30, 2010) net earnings of INR8.11 billion (US$178.2 billion), up 33.9% from the prior-year quarter. Results improved primarily due to a strong growth in net revenues and decline in provisions and contingencies (primarily comprising loan loss provisions), which was partially offset by higher-than-expected operating expenses.HDFC Bank’s net interest income for the quarter shot up 29.4% year over year to INR24,011.4 million (US$527.3 million), driving net interest margin (NIM) to 4.3%. NIM was 4.2% for the second quarter of 2009.
Non-interest revenues summed up to INR9,398.8 million (US$206.4 million), down 9.9% from the prior-year quarter. While fees and commissions and foreign exchange/derivative revenues rose from the prior-year quarter, the company experienced a year-over-year decline in profit on revaluation/sale of investments in the quarter. The largest component of non-interest revenue was fees and commissions of INR7,457 million (US$163.8 million), up 14.9% over the year-ago quarter.
HDFC Bank’s operating expenses for the quarter totaled INR15,923 million (US$349.7 million), up 15.3% from the year-ago quarter. Operating expenses were 47.7% of net revenues. Provisions and contingencies for the quarter were INR5,550 million (US$121.9 million), down 15.8% from INR6,588 million (US$135.0 million) in the prior-year quarter.
HDFC Bank’s total deposits spiked up 25.6% from the prior-year quarter to INR1,830.33 billion (US$40.2 billion). Additionally, substantial growth was witnessed in retail loans, which leaped 24.4% year over year to INR760.68 billion (US$16.7 billion).
Asset quality improved, with gross non-performing assets (NPAs) to gross advances down 22 basis points (bps) from the prior quarter and 84 bps year over year to 1.21%. Net NPAs also remained healthy at 0.30% of net advances, flat from the prior quarter and down 30 bps from the year-ago quarter.
HDFC Bank’s total capital adequacy ratio (CAR) as of June 30, 2010, (computed as per Basel 2 guidelines) remained strong at 16.3%, versus the regulatory minimum of 9% and higher than 15.4% recorded as of June 30, 2009. Tier-I CAR was 12.4% as of June 30, 2010, compared with 10.6% at June 30, 2009.
During the quarter, HDFC Bank allotted 19,47,431 shares pursuant to the exercise of stock options by certain employees.
HDFC Bank has broadened it network and as of June 30, 2010; the company’s distribution network stood at 1,725 branches and 4,393 ATMs in 780 cities. As of June 30, 2009, the company had 1,416 branches and 3,382 ATMs in 550 cities.
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