Loan growth, fall in bad loans powers HDFC Bank Q2 profits

HDFC Bank Ltd., India’s largest personal lender, posted second-quarter revenue that beat analyst expectations resulting from robust mortgage progress and a fall in dangerous loans.

Net revenue was 75.1 billion rupees ($1.02 billion) for the three months to September, up from 63.Four billion rupees a yr earlier, the lender mentioned in a submitting on Saturday. The revenue was 17% increased than the 64.1 billion rupees common estimate from 15 analysts, in keeping with the information compiled by Bloomberg.

The Mumbai-based lender mentioned its mortgage ebook grew 16% within the September quarter from a yr earlier, out pacing a median 5.1% rise for the nation’s banking sector. CEO-designate Sashidhar Jagdishan, who takes over from Aditya Puri later this month, expects dangerous loans to rise to a decade excessive of 1.4-2.0%, he mentioned in August.

HDFC Bank’s revenue progress “continues to set the pace for healthy fiscal 2021 profit, led by resilient revenue and an ability to defy India’s broader economic weakness, despite a change in CEO,” mentioned Bloomberg Intelligence banking analyst Diksha Gera.

Shares in HDFC Bank had been buying and selling 0.8% increased at 9.32 a.m. in Mumbai in contrast with a 1.5% rise in the primary banking gauge.

HDFC Bank’s outcomes point out that the nation’s monetary sector, which has been hit arduous by the fallout from the pandemic, could also be extra resilient than anticipated. While a six-month moratorium and a mortgage restructuring program has masked among the dangerous loans, many banks are being extra cautious about lending to keep away from additional weak spot in asset high quality.

HDFC Bank’s gross bad-loan ratio narrowed to 1.08% as of September finish from 1.36% within the earlier quarter. According to the lender, the ratio would have been 1.37% if the nation’s high court docket didn’t enable banks to proceed with a rest in soured debt recognition, over-riding the Reserve Bank of India’s order.

A US regulation agency has filed a category motion go well with on behalf of HDFC Bank shareholders over alleged improper lending practices in its vehicle-lending unit. The financial institution had additionally delayed reporting particulars of its loans, together with its tens of millions of retail debtors’ compensation standing, to one among India’s greatest credit score bureaus.