HDFC Bank has reported a net profit of Rs. 4.71bn (37 % yoy growth), ahead of our estimate of Rs 4.61bn. The key takeaways from the quarter: Strong NII growth, slower non- fund income growth, higher provisioning expenses as the bank set aside for contingencies and a lower tax rate. Sequentially the advance portfolio has declined: a function of securitization carried out during the quarter.
Non-fund income growth has been relatively slower this quarter at ~39% yoy, primarily due to decline in forex/derivative revenues. Lower tax outflow on account of tax free income booked during the quarter allowed the bank to make a higher provision on contingencies (for derivative related issues). On the positive side, sequentially there has been a decline in the provisions on NPA and standard assets (NPA provision to average loan down to 1.66% from 1.87% in Q3FY08)
Expect HDFC Bank to report a fully diluted EPS of Rs 54, post centurion bank of punjab merger with itself.