Q1 2014 Earnings Call Transcript

Transcript Call Date 07/17/2013

Operator: Good evening. Thank you for standing by, and welcome to the HDFC Bank Quarter 1, FY'2014 Result Conference Call presented by Mr. Paresh Sukthankar, Executive Director, HDFC Bank. At this time, all participants are in listen-only mode. There will be result update by Mr. Paresh Sukthankar followed by question-and-answer session.

I would like to hand the conference over to Mr. Paresh Sukthankar now. Over to you, Sir.

Paresh Sukthankar - Executive Director: Hi, everyone and welcome to this call. I have a Sashi and Bhavin and a couple of other colleagues with me as well. I'll start off with just outlining some of the key financial parameters. You probably had a chance to go through the press release, so I won't be walking you through the entire release, but just a couple of the key financials, and then we'll move to the questions.

For this quarter, the net revenue growth was up 19.7% and touched INR6,344 crores. The breakup of the net revenues is roughly a 70-30. It's a 69.6% in net interest income and 30.4% is other income. Net interest income was INR4,418 crores and grew 21%. The net interest margin was stable at 4.6%. Other income grew by 16.7% to INR1,925 crores.

On the cost side, the operating expenses for the quarter were at INR3,038 crores, which increased by 15.7% as against the net revenue growth, which I mentioned earlier was at 19.7%, so the cost to revenue ratio did improve from 49.5% for the June 30, 2012 quarter to 47.9% for this quarter.

Provisions were INR527 crores, after which the profit before tax was up 32.7% at INR2,779 crores after providing INR935 crores for tax and you will notice that the effective tax rate has gone up during this quarter post that higher effective tax, the net profit for the quarter was INR1,843.9 crores, which was up 30.1%.

On some of the key balance sheet parameters, the overall balance sheet was at INR4,16,000 crores. Loans and advances grew at by 21.2%. We touched INR2,58,589 crores. The retail piece grew a little faster than the corporate loan. So retail loan growth was about 25%, the wholesale loan growth was 16.5%. So this is on a year-on-year basis. Although for the quarter that is if you look at it from March to June, the wholesale piece actually was slightly higher than the retail piece in terms of the absolute contribution during the quarter or certainly an equivalent amount. Therefore the mix of wholesale – retail to wholesale as of June in the loan mix was 54% to 46%. So 54% of the loan book is retail and the balance 46% wholesale.

On the deposit side, deposit touched INR303,000 crores, which grew by just under 18%. The CASA proportion as of the end of the quarter was 44.7%. The branch network as of June, we touched 3,119 branches. We also crossed 11,000 ATMs. We are at 11,088 ATMs and all of these were in 1,891 towns and cities. 54% of this network now is in semi-urban and rural areas.

On the asset quality front, there has been some increase in gross and net NPAs in absolute terms. On a percentage basis, percentage of gross advances basis, gross NPAs were at 1%, both in June of last year and June of this year. Although if you go to the second decimal, there is a 6-7 basis points increase on a year-on-year basis, it went from 0.97 to 1.04, so that's how it still remains 1%, but there is no underlying increase.

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