HDFC Bank has achieved impressive financial results in the first half of 2019. A number of key financial indicators have seen significant growth.
The bank’s net interest income for the period ended June 30, 2019 is Rs. 1.42 billion. This is a 28% increase over the previous year’s figure of Rs. 1.11 billion. The profit before tax also rose sharply, from Rs. 293 million in the first half of 2018 to Rs. 348 million in the corresponding period this year. Total assets grew from Rs. 49.2 billion at end 2018 to Rs. 53.3 billion by the end of June 2019.
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 organization. “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 (Housing Development Finance Corporation Bank) was established under a special act of Parliament, which imposes statutory responsibilities.
Its core business is providing housing loans for low and middle income people in the country, with 75% of loans being disbursed for this purpose. Gamage stated that they are now following a more prudent and conservative impairment policy. He noted that the impairment provision against bad and doubtful debts, which was Rs.23 million in the first 6 months of 2018, was 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 6 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.
HDFC Bank has also contributed significantly to the state coffers. For the first 6 months of this year, it contributed as much as Rs. 350 million. This is a 43% 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.
Pathirana further said, “In June this year, we received Rs. 250 million from the government treasury as Basel III compliant additional tier-1 capital, strengthening our balance sheet and enabling us to meet the minimum regulatory core capital requirements.”
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