HDFC Bank sees lowest-ever profit growth at 15% on note ban
Private sector lender HDFC Bank on Tuesday reported its lowest-ever quarterly profit growth of 15% at ?3,865 crore for the December quarter. The slow growth was attributed to the government's decision to demonetise high-value currency. Notably, the lender had consistently delivered 30% profit growth for more than 32 quarters without a break till about two years ago.
Mumbai, Jan 24 (PTI) Private sector HDFC Bank today reported its lowest-ever quarterly profit growth at 15 per cent at Rs 3,865.3 crore for the December quarter, pulled down by a margin compression following the note-ban and foreign currency deposit redemptions. The city-headquartered lender, which had made a name for itself by consistently delivering 30 per cent profit growth for more than 32 quarters without a break till about two years ago, and then slipped to the 20 per cent levels with sluggish economic growth, saw its margins narrowing by 10 bps to 4.10 per cent during the third quarter ended December 31. The Aditya Puri-headed bank also saw redemptions of USD 3 billion worth of NRI deposits raised under a special window opened by the RBI in 2013 which led to a USD 2-billion reduction in the foreign currency loan book. HDFC Bank had raised the largest amount through this window. The lender saw a 37 per cent surge in the current and saving account balances which helped the share of the low-cost deposits ratio to 45 per cent after the November 8 demonetisation. It can be noted banks were not able to benefit from the surge fully because of 100 per cent CRR on new deposits till December 8. Deputy Managing Director Paresh Sukthankar acknowledged this is the slowest profit growth ever for over two decade-old bank but defended it, saying this is because of the external environment, and declined to give any guidance on how it sees the next few quarters. He, however, said the private lender will continue to outgrow the system, and gave out data on both deposits and advances growth where it has achieved this. He said the bank lost out on "fairly meaningful" quantum of fees from point of sale terminals and ATM usage during the demonetisation exercise (Nov 9-Dec 30), but said this is for the benefit of larger good in the long-term. Sukthankar made a plea for a "balance" to be achieved on the merchant discount rates so that those investing in the infrastructure also benefit. But the market lapped the bank counter as they believe the lender did well in a challenging time. 