HDFC Bank Limited: Form 6-K Summary
Business Context and Reporting Period
This Form 6-K filing by HDFC Bank Limited, dated April 23, 2018, reports the audited financial results for the quarter and full year ended March 31, 2018. The results were approved by the Board of Directors on April 21, 2018. The filing includes standalone and consolidated financial statements, segment reporting, and a summarized balance sheet.
Key Financial Metrics
| Metric | Quarter Ended Mar 31, 2018 | Year Ended Mar 31, 2018 |
|---|---|---|
| Total Income | Rs. 25,549.7 crore | Rs. 95,461.7 crore |
| Net Profit (Standalone) | Rs. 4,799.3 crore | Rs. 17,486.8 crore |
| Net Profit (Consolidated) | N/A | Rs. 18,510.0 crore |
| Net Interest Income | Rs. 10,657.7 crore | Rs. 40,094.7 crore (Derived) |
| Other Income | Rs. 4,228.6 crore | Rs. 15,220.3 crore |
| Operating Expenses | Rs. 6,050.6 crore | Rs. 22,690.4 crore |
| Provisions & Contingencies | Rs. 1,541.1 crore | Rs. 5,927.5 crore |
| Core Net Interest Margin | 4.3% | 4.3% |
| Cost-to-Income Ratio | 40.6% | 41.7% |
| Gross NPA Ratio | 1.30% | 1.30% |
| Net NPA Ratio | 0.40% | 0.40% |
| Capital Adequacy Ratio (CAR) | 14.8% | 14.8% |
| Balance Sheet Size | Rs. 1,063,934 crore | Rs. 1,063,934 crore |
| Total Deposits | Rs. 788,771 crore | Rs. 788,771 crore |
| Total Advances | Rs. 658,333 crore | Rs. 658,333 crore |
Material Changes vs. Prior Period
- Profit Growth: Standalone net profit for the year increased by 20.2% to Rs. 17,486.8 crore. Consolidated net profit rose by 21.4% to Rs. 18,510.0 crore.
- Revenue Expansion: Total income for the year grew by 17.0% to Rs. 95,461.7 crore. Net revenues (net interest income + other income) increased by 21.7%.
- Asset Growth: Total advances grew by 18.7% year-over-year, with retail loans growing 27.4% and wholesale loans 9.4%. Total deposits increased by 22.5%.
- Asset Quality: Gross NPAs increased slightly to 1.30% from 1.05% in the prior year, while Net NPAs rose to 0.40% from 0.33%.
- Efficiency: The core cost-to-income ratio improved to 41.7% for the year, down from 44.5% in the previous year.
Guidance, Outlook, and Management Commentary
- Dividend: The Board recommended a dividend of Rs. 13 per equity share (650% dividend), subject to shareholder approval at the Annual General Meeting.
- Capital Raising: The Board approved the issuance of Perpetual Debt Instruments (AT1), Tier II Capital Bonds, and Long Term Bonds up to Rs. 50,000 crore over the next twelve months via private placement, subject to regulatory and shareholder approval.
- Equity Raise: A previous approval exists to raise up to Rs. 24,000 crore via preferential issue to promoters and QIP/ADR/GDR programs, subject to regulatory approvals.
- Subsidiary Performance: HDFC Securities Limited (HSL) reported a 59.5% increase in net profit. HDB Financial Services Limited (HDBFSL) reported a 39.1% increase in net profit with a 34.9% growth in its loan book.
- Network Expansion: The bank expanded to 4,787 outlets and 12,635 ATMs across 2,691 cities/towns.
Investor Verification Checklist
- Verify the final approval of the Rs. 13 per share dividend at the Annual General Meeting.
- Monitor the execution and regulatory approval of the proposed Rs. 50,000 crore debt issuance and Rs. 24,000 crore equity raise.
- Track the trend in Gross and Net NPA ratios, noting the increase to 1.30% and 0.40% respectively.
- Review the impact of the proposed capital raises on the Capital Adequacy Ratio (currently 14.8%).
- Confirm the performance of subsidiaries HSL and HDBFSL in subsequent quarterly reports.