HDFC Bank begins 2011 with poor performance

HDFC Bank which had a resounding 2010 has begun the new financial year on a poor note with dip in profits and net income along with relatively subdued lending.

In the first quarter of 2011 financial year, operating profit had dipped by 44% to Rs. 113.3 million whilst profit before tax was down by 36% to Rs. 94 million and net profit was down 33% to Rs. 70 million. At Group level post-tax profit was down by 70% to Rs. 70.3 million over the first quarter of 2010.

The dip in profit is despite lower VAT and income tax in first quarter a feature which has enabled other banks to boost their bottom line.

In the financial year ended 31 December, 2010, HDFC Bank’s net profit grew to Rs. 135.3 million from Rs. 56.4 million whilst at Group level it rose from Rs. 108 million to Rs. 247 million.

The Bank’s total income had declined by 30% to Rs. 587 million from Rs. 843 million in the first quarter of 2010. Interest income dipped by 32% to Rs. 566.4 million whilst interest expenses declined by only 2% to Rs. 331 million. Consequently net interest income had dipped by 52% to Rs. 256 million. Non interest expenses on the other hand grew by 4% to Rs. 149 million whilst provision for bad and doubtful debts had declined considerably from Rs. 160.5 million in first quarter of 2010 to Rs. 6.5 million this year.

HDFC Bank’s assets had risen by 4% to Rs. 15.98 billion as at 31 March, 2011 from Rs. 15.37 billion as at 31 December, 2010.

Its housing finance lending had grown by only Rs. 208 million or 2% in the first quarter to Rs. 10.56 billion from Rs. 10.35 billion as at 31 December, 2010. In the first quarter of 2010 housing loans advanced had increased by Rs. 747 million over the first quarter of 2009.

Total non performing loans in the quarter had increased to Rs. 2.95 billion over 2010 end.  Total gross loans and advances were up 2% to Rs. 13.75 billion whilst net loans had grown by 3% to Rs. 13.22 billion from Rs. 12.89 billion as at 31 December, 2010.

Gross Non Performing Advance Ratio as a percentage of interest in suspense was 21.84% in 1Q of 2011 as against 21.52% as at end 2010. Gross Non performing advance ratio as a percentage of net of interest in suspense and provisions was 19.64% in comparison to 19.22% at end 2010.

Deposits mobilised in the first quarter of 2011 amounted to Rs. 548 million or up by 7%  to Rs. 8.251 billion from Rs. 7.702 billion as at end 2010. Time deposits accounted for the bulk, up 7% to Rs. 7.11 billion and savings deposits up 9% to Rs. 1.1 billion. In the first quarter of 2010, deposit mobilised amounted to Rs. 987 million.

In 2010 first quarter HDFC Bank’s net profit of Rs. 104 million was against a loss of Rs. 50.7 million in the first quarter of 2009 whilst operating profit amounted to Rs. 201 million. Total income grew by 70% and net interest income by 935% to Rs. 491 million. Provisions for bad and doubtful debts of Rs. 160.5 million in 1Q of 2010 was as against Rs. 15.7 million in the first quarter of 2009.

In full year of 2010 gross loans and advances grew by 8.5% to Rs. 13.1 billion whilst deposits from customers rose by 26% to Rs. 7.7 billion.

Last week HDFC’s share price declined by Rs. 105.30 to Rs. 1,566 though it peaked an intra-week high of Rs. 1,700. Its 52-week highest is Rs. 1,900 whilst for the 31 March, 2011 ended quarter it was Rs. 1,190 and closed at Rs. 1,125.90.

As at 31 March, 2011, HDFC’s major shareholders are National Housing Development Authority (49.73%), LOLC (14.62%) and Perpetual Capital (14.16%).