HDFC Bank Reports First-Quarter Profit Climbed 31% (Update3)
By M.C. Govardhana Rangan
July 14 (Bloomberg) -- HDFC Bank Ltd., India’s third largest, posted a 31 percent increase in first-quarter profit as fees rose and it gained from trading in bonds and currencies.
Net income rose to 6.06 billion rupees ($124 million), or 14.1 rupees a share, for the three months ended June 30, from 4.64 billion rupees, or 10.8 rupees, a year earlier, the Mumbai- based bank said in a statement to the Bombay Stock Exchange today. The profit compared with the 5.8 billion rupee median estimate of five analysts surveyed by Bloomberg News.
HDFC Bank, which bought Centurion Bank of Punjab Ltd. last year in India’s biggest banking acquisition, posted gains on its bond portfolio after surplus cash in the banking system drove up demand for government securities during the quarter. Bond holdings of the lender and its rivals may continue to climb this quarter as the Reserve Bank of India buys back as much as 800 billion rupees of bonds in the six months ending Sept. 30.
“Banks’ treasury operations are going to benefit as long as the RBI is going to conduct open market operations,” said Abhijit Majumder, a research analyst at Prabhudas Lilladher Ltd. in Mumbai. “Earnings, loan growth and bad loans are all on expected lines” for the bank, he said
Shares of the lender rose as much as 4.1 percent and added 0.3 percent to 1,377.8 rupees in Mumbai trading as of 1:16 p.m.. The stock had gained 54 percent during the quarter, making it the worst performer on the Bombay Stock Exchange’s Bankex Index, which rose 83 percent.
HDFC’s net interest income, or the difference between revenue from lending and what it pays on deposits, rose 7.7 percent to 18.6 billion rupees during the quarter.
Treasury Operations
The lender’s pretax profit from treasury operations, which includes trading in bonds and currencies, rose more than ninefold to 4.04 billion rupees, from 435 million rupees a year earlier, according to the statement. Non-interest income, including fees and commissions, climbed 76 percent.
India’s five-year bonds rose in the quarter ended June 30 as surplus cash in the banking system boosted demand for securities, increasing the value of HDFC Bank’s holdings. Notes maturing in 2014 fell 27 basis points to 6.49 percent from March 31, according to data compiled by Bloomberg.
The bank almost doubled the funds set aside to cover bad loans as customers delayed payments. It increased provisions in the quarter to cover delinquencies and other losses to 6.59 billion rupees from 3.44 billion rupees a year earlier.
bloomberg.com
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