HDFC Bank Q4FY14 Net Profit Up By 23.1% To Rs 2326.5 crore

HDFC Bank, the third largest bank in India, posted its fourth quarter and annual result of FY14 in line with street expectations. Net profit of the bank for the quarter ended March 2014 increased by 23.1% on yearly basis and was at Rs 2326.5 crore against the street expectation of around Rs 2370 crore. 

Net Interest Income (NII), the difference between interests earned and expended, increased by 15.3% on yearly basis and recorded Rs 4952.6 crore for Q4FY14. This was mainly driven by average asset growth of 20.3% and net interest margin of 4.4% for the quarter. Other income of the bank which accounts for 28.8% of net revenues was up by 11% in the same period and was Rs 2001.4 crore for Q4FY14.

So, what helped bank to post higher bottomline growth was a better control of its operating expenses, which grew by mere 1.2%, compared to corresponding quarter of previous year and stood at Rs 3147 crore for Q4FY14. This helped bank to bring down its cost-to-income ratio from 51.4% (Q4FY13) to 45.7% (Q4FY14).

The asset quality of the bank remained stable and gross Non-Performing Asset (NPA) actually declined by 1% on sequential basis and on absolute basis, whereas net NPA increased by 3% in the same period. As percentage of gross advances and net advances, gross NPA and net NPA remained at 1% and 0.3% respectively, the level seen in the previous quarter. Total restructured loans stood at 0.2% of gross advance at the end of March 2014. 

The board of the bank has also recommended dividend of Rs 6.85 per share for FY14. 

In today's trade, shares of HDFC Bank closed 1.45% above its previous close at Rs 726.35. Currently the shares of HDFC Bank are trading at 3.9 times its book value and are fairly valued.