K. ARAVIND
HDFC Bank, the second largest bank in the country in terms of assets, has an exemplary business model. HDFC Bank is considered a safe haven in the name of this business model as the banking sector is constantly being dragged into the news for non-performing assets, bad debts and loan frauds.
HDFC Bank has reported strong performance for the October-December quarter. The bank has a net profit of Rs.8,758 crore. Profit growth was 18 per cent over the same period last year. This was in line with the expectations of the stock market. The profit growth was Rs.7659 crore during the same period last year. The company had posted a net profit of Rs.7,711 crore in the second quarter.
Net interest income rose by 17.7 per cent to Rs.10,657 crore and other income rose by 22.7 per cent to Rs.3,446 crore. Net interest margin remains at 4.3 per cent. The bank achieved a credit growth of 18.7 per cent. The bank places more emphasis on retail lending. Fifty-seven per cent of the lending business is in retail loans. Retail credit grew by 27.4 per cent while wholesale credit grew by 9.4 per cent.
While the banking sector is mired in non-performing assets, the bank’s business style of reducing NPAs is commendable. Total non-performing assets accounted for 1.30 per cent of total loans. Total non-performing assets are only 0.4 per cent. It was 1.29 per cent and 0.44 per cent in the previous quarter.
HDFC Bank currently has the highest weightage in the Nifty, an index with 50 shares. About one tenth of the Nifty weightage is held by HDFC Bank.
Healthy growth on the balance sheet, superior asset quality and management excellence make HDFC Bank one of the most valuable stocks in the market. It is hoped that the Bank will continue to excel in its profitability ratios.
