HDFC Bank's profit up 33% to $26mn

The bank’s board approves stock split as its beat market estimates behind surge in retail and corporate lending.

HDFC Bank beat market estimates with a net profit of Rs 1,115 crore ($25.96 million) for the quarter ended March 2011- a jump of 33% over the corresponding quarter last year. The bank's board approved a share split which will result in subdivision of each share with a nominal value of Rs 10 ($0.22) each into five equity shares of a nominal value of Rs 2 ($0.04) each, a step which will make the stock more affordable to retail investors.

Following the rise in profits, HDFC Bank recommended an enhanced dividend of Rs 16.50 ($0.37) per share for FY11 as against Rs 12 ($0.27) per share for the previous year. Net profit for the whole year was Rs 3,926.4 crore ($886.32 million), up 33.2%, over the year ended March 31, 2010. Despite the strong performance, shares of the country's second-largest private bank closed 1.89% lower at Rs 2,315 ($52.26) as against the sensex which closed 1.53% lower. 

The growth in profits was driven by a surge in retail and corporate lending. The bank's total balance sheet size increased by 24.7% from Rs 222,459 crore ($50.22 billion) as of March 31, 2010 to Rs 277,353 crore ($62.61 billion) as of March 31, 2011. As against the industry growth of around 21%, the bank's total advances grew 27.1% to Rs 159,983 crore ($36.11 billion) while deposits grew 24.6% to Rs 208,586 crore ($47.08 billion). The bank's retail loan book has crossed Rs 80,113 crore ($1.81 billion). These include Rs 11,000 crore ($248 million) of home loans, Rs 22,000 crore (496.61 million) of auto loans, and Rs 8,000 crore (181 million) of commercial vehicle loans. 

The bank has managed to maintain its net interest margin at 4.3% over the December quarter. "There has been a sharp increase in deposit rates in the March quarter and we expect that going forward, the net interest margins should be in the region of 3.9-4.3%." said Paresh Sukthankar, executive director of the bank. Commenting on the reason for the split, Sukthankar said that retail holding in the bank had fallen below 10%. "A share split will make shares of HDFC Bank more affordable to retail investors" he added. 

View the full story in Times of India.