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HDFC: Net Interest Income slows down - Views on News from Equitymaster
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HDFC: Net Interest Income slows down
Nov 4, 2015

HDFC declared its results for the second quarter (2QFY16). The institution has reported 6% YoY growth in net interest income while net profits have grown by modest 18% YoY during 2QFY16. Here is our analysis of the results.
Performance summary
  • On the back of a 12% growth in loan book, HDFC posted a 6% growth in net interest income in 2QFY16. For 1HFY16, the net interest income was up by 11%.
  • The net interest margin remained steady at 4% for the quarter.
  • The other income was higher by 101% for 2QFY16 on account of higher dividend income booked during the quarter. For 1HFY16 though, other income was up by just 2.7%.
  • Provisions were up by more than 40% for both 2QFY16 and 1HFY16.
  • Capital adequacy and gross NPAs stand at 16.1% and 0.7% respectively at the end of September 2015.

Standalone financial performance snapshot

(Rs m) 2QFY15 2QFY16 Change 1HFY15 1HFY16 Change
Interest Income 64,285 69,937 8.8% 125,720 139,733 11.1%
Interest Expense 44,739 49,175 9.9% 88,044 97,809 11.1%
Net Interest Income 19,546 20,762 6.2% 37,676 41,924 11.3%
Net interest margins 4.01% 3.95%   4.01% 3.95%  
Other Income 2,422 4,865 100.9% 5,599 5,752 2.7%
Other Expense 1,803 1,872 3.8% 3,513 3,901 11.0%
Provisions and contingencies 350 520 48.6% 700 1,020 45.7%
Profit before tax 19,816 23,236 17.3% 39,062 42,755 9.5%
Tax 6,240 7,190 15.2% 12,040 13,100 8.8%
Effective tax rate 31.5% 30.9%   30.8% 30.6%  
Deferred Tax Liability - -     -  
Profit after tax/ (loss) 13,576 16,046 18.2% 27,022 29,655 9.7%
Net profit margin (%) 21.1% 22.9%   21.5% 21.2%  
No. of shares (m)         1577.7  
Book value per share (Rs)*         215.0  
P/BV (x)         4.9  

* (Standalone book value as on 30th September 2015)

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