HDFC Bank, which reported a 20 per cent rise in December quarter net at Rs 4,642.6 crore, today disclosed that it had under-reported provisions for some accounts in FY17 due to lack of clarity on the status of those assets among the lenders.
Accordingly, the city-based HDFC Bank, known for its asset quality metrics, also disclosed that it had over- reported its profit for FY17 due to the same reason.
"As part of the supervisory process, the RBI had pointed out certain divergences in our asset classification of three accounts as of March 2017," the bank said without naming the three large accounts.
Accordingly, it today reported a divergence in gross non-performing assets worth Rs 2,051 crore for FY17, while net NPAs divergence stood at Rs 1,258.37 crore. For the full FY17, it reported a divergence in provisioning of Rs 793.39 crore.
The Aditya Puri-run bank also said it had over- reported net profit at Rs 14,549.66 crore for fiscal 2017, while its actual profit was only Rs 14,028.24 crore, including a write-back of the provisions made for an account earlier.
While it had divergence in these three accounts worth Rs 2,051.76 crore in FY17, it along with other lenders upgraded accounts worth Rs 1,707.18 crore later and has accordingly provided Rs 294.18 crore during this quarter.
For the reporting quarter, the bank said its net interest income rose to Rs 10,314.3 crore from Rs 8,309.1 crore, while net interest margin stood 4.3 per cent.
Provisions and contingencies almost doubled to Rs 1,351.4 crore from Rs 715.8 crore year-on-year, as gross NPA ratio rose to 1.29 per cent from 1.05 per cent last year. Net NPAs also inched up to 0.44 per cent from 0.32 per cent.
"The biggest growth has come in from net interest income, which has grown 24 per cent, while other income growth has been in the mid-20s. So, overall revenue growth has been extremely strong. However, some of that growth has been offset by higher provisioning, but that's a tradeoff," deputy managing director Paresh Sukthankar told reporters.
On the divergence in provision and profit numbers he explained that, "as of the last quarter, we had mentioned that while there was no finality, we had already made contingent provisions, immediately thereafter that account had been declared an NPA.
"Of the balance amount some had already been declared NPA in the June and the September quarters. And since we now have the finality we have given the divergence of the total NPAs," Sukthankar said.
On the over-reporting of profits, he said the bank has made adequate provisions for the divergent amount during this quarter and explained that the difference in numbers was due to the divergence in provisioning as found by the regulator.
In the reporting quarter, one of the three accounts, which was under the 5:25 scheme, was upgraded to a standard account, he said without naming the same.
Advances grew 27.5 per cent to Rs 6,31,215 crore while deposits rose 10.1 per cent to Rs 6,99,026 crore.
Talking about the lending rates, he said there could be some upward pressure on both lending and deposits rates, going ahead.
Asked if the bank is also looking to hiking the lending rates based on MCLR, like its smaller peers Axis Bank and Yes Bank had done, Sukthankar said, "the change in MCLR is a function of what happens to deposit rates, especially for those tenors where we get a large part of our deposit inflows.
"So, currently, unless we have a change in our deposit rates between now and February 6 (next RBI policy), it is tough for me to try and predict. But it's a set formula and depending on how deposits rates move, you will see a change in rates," he said.
The bank's scrip ended 1 per cent up at Rs 1,951.20 on the BSE, which closed rallied 0.71 per cent.
Meanwhile, the bank also held an extra-ordinary general meeting today to seek shareholders approval to raise up to Rs 24,000 crore through issue of equity shares.
"The pace at which we are growing, we've been consuming capital and that is evident even in the past few quarters. So, capital that we are raising is to support growth for the next few years," Sukthankar said.
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