HDFC Bank profits rise in first half 2019
View(s):HDFC Bank, the market leader in housing development finance, has achieved impressive financial results in the first half of 2019 with a number of key financial indicators showing significant gains.
The bank’s net interest income for the period ended June 30, 2019 was Rs. 1.42 billion, a 28 per cent increase over the previous year’s figure of Rs. 1.11 billion. Profit before tax also rose to Rs. 348 million in the 6-months this year from Rs. 293 million in the first half of 2018. Total assets grew from Rs. 49.2 billion at end 2018 to Rs. 53.3 billion by the end of June 2019, the bank said in a media release.
General Manager/CEO of HDFC Bank, Palitha Gamage attributed their success to the prudent financial management and risk mitigation strategies adopted at all levels of the organisation. “We have achieved such growth despite our obligations to serve the housing requirements of society, and despite stiff competition from much larger banks,” he said.
HDFC Bank’s core business is providing housing loans for low and middle income people in the country, with 75 per cent of loans being disbursed for this purpose.
Mr. Gamage stated that they are now following a more prudent and conservative impairment policy, adding that the impairment provision against bad and doubtful debts, which was Rs.23 million in the first six months of 2018, increased to Rs. 136 million during the corresponding period this year.
“Despite this provisioning, and despite paying higher taxes to the government, the bank’s after-tax profitability has increased significantly. The post-tax profit, which was Rs.188 million in the first six months of 2018, rose to Rs. 228 million during the corresponding period this year. This positive performance runs counter to the general trend in the banking industry,” the release said.
HDFC Bank also contributed significantly to the state coffers. For the first six months of this year, it contributed as much as Rs. 350 million, a 43 per cent increase over the Rs.244 million for the corresponding period last year.
Chief Financial Officer, HDFC Bank, D.V. Pathirana stated that the main contributor to the increased profitability was their success in managing the cost of funds. He added that their capital adequacy ratios are also above the banking industry average.
“In June this year, we received Rs. 250 million from the Treasury as Basel III compliant additional tier-1 capital, strengthening our balance sheet and enabling us to meet the minimum regulatory core capital requirements,” he said.
HDFC Bank has over three decades of experience in housing development finance. In 2012, it began diversifying the product portfolio and entered new market segments. Among the new areas of business were leasing and SME loans. “This diversification strategy proved quite successful. The bank now caters to niche customer segments with innovative products that go beyond the core business of providing housing loans. Its services are delivered through 39 branches located across the country,” it said.