Boosted by a 23 per cent year-on-year growth in loans, HDFC Bank posted 25 per cent higher profit in the December 2013 quarter. But with growth being driven by the lower yielding overseas loans, net interest margin for the bank fell 10 basis points sequentially. Slow growth in the high yielding retail loans was another dampener.
HDFC Bank, which raised $3.4 billion through FCNR deposits under the RBI’s special swap facility, offered NRI depositors an overdraft facility under this scheme. These overseas loans drove growth, excluding which the loan book would have grown only 18 per cent.
Retail loans grew at a much slower pace of 13.6 per cent in the quarter, pulled down by the slowdown in auto loans. A mere 1 per cent growth — as against 18-20 per cent in the past — in home loans too played spoilsport. This was on account of the bank buying only a small amount of loans from parent HDFC, under an arrangement with the latter.
That overall growth was boosted by the 22 per cent growth in corporate loans offers little comfort. With the demand for these loans being largely for short-term working-capital needs, this may not be sustainable.
RIL: ‘Other income’ provides respite
Despite a poor performance by its core businesses, Reliance Industries (RIL) posted net profit of Rs 5,511 crore in the December 2013 quarter — almost the same as the year-ago period. What saved the day was a year-on-year 33 per cent growth in ‘other income’. Higher interest rates on the company’s big cash hoard helped. Segment-wise, petrochemicals posted 10 per cent higher profit, despite lower volumes due to demand slowdown. Higher prices, aided by a weak rupee, made this possible.
The refining segment however fared badly both in terms of volumes and price. The gross refining margin at $7.6 a barrel was nearly the same as in the September quarter, despite tough market conditions. But this was 21 per cent lower than the year-ago margin. The production fall in the KG-DG field contributed to the net profit of the oil and gas business falling 9 per cent.
But, there were some positives too.
Volumes from RIL’s shale gas ventures in the US have been picking up. Also, the oil and gas business will reap the benefit of the hike in prices for the KG-D6 gas from April 2014. Investments in the refining and petrochemical businesses too will start to pay off, once the cycle turns. The company also posted profit at the after-tax level for the first time.
HCL Tech: Leads in revenue growth
HCL Technologies led the IT pack with 4 per cent sequential growth in revenues (dollar terms) in the December 2013 quarter. Next came in TCS (3 per cent), closely followed by Wipro (2.9 per cent) and then Infosys (1.7 per cent).
While HCL benefited from growth in infrastructure management services (6 per cent sequentially), expansion in the high-margin enterprise services (2-3.5 per cent) worked in favour of TCS and Infosys.
Healthy growth across all key segments helped Wipro.
Among business verticals, banking, financial services and insurance, manufacturing and retail grew at a rate faster than the overall revenue growth for HCL, TCS and Infosys.
TCS also witnessed healthy growth in the telecom segment. For Wipro, growth in finance solutions, energy and healthcare exceeded the overall growth rate.
Geographically, all the four players did quite well in the European market.
In terms of client additions, Infosys alone figured in the $300-million and $200-million category, while Wipro added one client in the $100- million category. Other client increases for the four players were in the smaller client category.