HDFC Bank, the first among the large private sector banks to declare its results, has reported yet another quarter of consistent performance across parameters. From healthy growth in loans and stable margins to a low loan delinquency rate, the bank’s performance has not seen any notable deviation from its past record.

One, loan growth, which was a steady 20-22 per cent through most of last fiscal, remained strong even in the latest June quarter.

While growth in overall bank credit, which had touched decadal low levels in the March quarter, is now hovering close to 20-year lows of 9 per cent, HDFC Bank’s loan book continues to grow at a healthy clip. During the June quarter, loan growth (year-on-year) at 22.4 per cent was higher than in the March quarter (20.6 per cent).

Over the last year, HDFC Bank’s loan growth was led by the corporate segment rather than the retail space. But a large portion of the bank’s lending to the corporate segment relates to working capital financing, which mitigates the risk associated with project lending.

During the June quarter though, loan growth was led by both retail loans (24.6 per cent) and corporate loans (18.5 per cent).

The growth in retail was driven by strong traction in home, auto and personal loans. Lending to the commercial vehicles segment, which was impacted by the slowdown in the industry volumes, has been showing some signs of pick-up since the March quarter. Two, HDFC Bank’s margins have also been within a narrow 4.3-4.5 per cent range in recent quarters. In keeping with the past trend, the bank’s net interest margin (NIM) for the June quarter stood at 4.3 per cent.

A healthy loan mix tilted in favour of high-margin retail loans (53 per cent of total loans), continues to lend support to margins.

CASA ratio dips The only weak link has been the fall in the bank’s low-cost current account savings account (CASA) ratio to 39.6 per cent of deposits in the June quarter from 44 per cent in the previous quarter.

Current account deposits fell 9 per cent sequentially. However, cut in deposit rates across all banks is likely to have led customers to switch to fixed deposits to lock into higher rates.

This trend was also visible in the December quarter when the bank’s CASA ratio slipped to 40.9 per cent, only to rebound in the subsequent quarter. The bank’s CASA ratio is likely to bounce back in the ensuring quarters.

Delinquency rate low A low delinquency rate has been the third parameter that has held steady in the worst of times. The bank’s gross non-performing assets (GNPAs) stood at 0.95 per cent of loans in the June quarter, within its past range of 0.9-1 per cent.

This is lower than that of its peers, such as Axis Bank (1.3 per cent levels) and ICICI Bank (around 3 per cent). HDFC Bank’s restructured book is also very small at just 0.1 per cent of loans.

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