HDFC Bank: Result, Dividend & Split

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Mumbai, Apr 19: HDFC Bank declared a net profit of Rs 1,115 crore for the March 2011 quarter. Thus, registering an increase of 33% year-on-year (y-o-y), meanwhile the bank reported 2.47% increase in quarter-on-quarter (q-o-q).

On this occasion HDFC Bank also announced an increase in its dividend and split of shares. Both will be subject to the approval of shareholders at the next general meeting.

The bank's board approved a share split in the ratio of 1:5, meaning each share of Rs 10 will be split to a nominal value of Rs 2 each. This will make increase the liquidity of the share by making it more affordable for retail investors. So, at its current market price of Rs 2,345 per share on (Apr 19, 9.48 a.m.), will change to Rs 469 per share after the split.

On the dividend front the bank announced, that it will increase the dividend amount to Rs 16.50 per share for FY11 instead of Rs 12 per share offered in FY10, the previous year.

The Bank's total Capital Adequacy Ratio (CAR) as at March 31, 2011 (computed as per Basel II guidelines) stood at 16.2% as against 17.4% of March 31, 2010 and against the regulatory minimum of 9.0%. Tier-I CAR was 12.2% as of March 31, 2011.

According to analysts in recent quarters, HDFC Bank has witnessed a slow down in its year-on-year growth in advances for each quarter in last fiscal. Outstanding advances grew 27.14% by March from a year ago.

For the March quarter, advances grew just 0.5%, less than the expected growth. Deposits grew at 8.5% over the three months ended March. Outstanding deposits at the end of FY11 gained 24.6% from a year ago.

Due to rate hikes and tighter liquidity, HDFC has increased its deposit rates like other banks. Despite low-cost current account and savings account (CASA) deposits accounting for over half of its total deposits, net interest margin came in at 4.2% for the three months ended March. While that is the same as the December quarter, it is about 20 basis points less than a year ago.

Total restructured loans were at 0.4% of gross advances of which 0.1% were restructured loans classified as NPAs as on March 31, 2011. These loans were largely from the microfinance sector.

Although the result would have been below the 30% mark, a little change in the rules of provisions ensured that the company reports the net profit growth in 30%. The bank set aside Rs 431.3 crore for provisions and contingencies in the March quarter, a decline of 2% from the year ago.

This was affordable because of the decent asset quality. Net non-performing assets as a percentage of net advances shrunk to 0.2% in the three months ended March, same as the December quarter, and down from 0.3% at the end of the previous fiscal. Its capital adequacy ratio stood at 16.2% on 31 March, well above the 9% stipulated by the Reserve Bank of India.

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