Page 7 - Banking Finance June 2020

BANK UPDATE

to almost half of the book, excluding of our further public offering and would days past-due shall exclude the mora-
the anchor allotment," said a person like to thank all the investors, partners torium period for the purposes of de-
advising the bank on the FPO. and employees who have supported termining whether an asset is non-per-
the issue. It is an important step in our forming)," it said.
Some of the institutional investors that
participated in the deal include State journey of transformation and is a tes- HDFC Bank also said that it holds pro-
Bank of India, Life Insurance Corp of tament to the trust placed in the insti- visions as at 30 June 2020 against the
tution," said Prashant Kumar, manag-
India, IIFL, Edelweiss, Bajaj Allianz, potential impact of covid-19 based on
HDFC Life, Punjab National Bank, HDFC ing director and chief executive of Yes the information available at this point
MF, Union Bank, Bajaj Holdings, Bank, in a statement. in time.
Avendus Wealth Management, IFFCO “The provisions held by the bank are
Tokio General Insurance, Norges fund, HDFC Bank reports 19.6%
in excess of the RBI prescribed norms,"
Millennium Management Global, rise in Q1 profit it said, without disclosing the quantum
Aurigin Capital, Exodus Capital,
HDFC Bank reported a 19.6% year-on- of provisions set aside for covid-19. Its
Wellington Capital, Jane Street Capital,
year (y-o-y) rise in net profit to Rs. total provisions stood at Rs. 3,891
said a second person advising the bank.
6,659 crore for the three months to crore, up 49% from the same period
Apart from institutional investors, de- June owing to a rise in net interest in- last year.
mand from all other categories of in- come (NII) and lower tax outgo. The bank’s total advances were at Rs.
vestors was tepid.
The bank’s net interest income – dif- 10.03 trillion in Q1 of FY21, an increase
The portion of shares reserved for high ference between interest earned and of 20.9% over the same period last
net-worth individuals and other non interested expended – grew 17.8% y- year. The domestic retail loans grew
institutional investors was subscribed o-y to Rs. 15,665.4 crore. Its net inter- 7.2% and domestic wholesale loans
63%, while the shares allocated for est margin -- a key measure of profit- grew 37.6%, it said, adding that the
retail investors and employees were ability – stood at 4.3%, unchanged domestic loan mix between retail and
subscribed only 47% and 33%. from the same period last year. wholesale was 48:52. Overseas ad-
While the bank has managed to raise HDFC Bank’s asset quality improved in vances constituted 3% of total ad-
only Rs14,267 crore out of its total the June quarter with gross bad loan vances, the bank said.
target of Rs15,000 crore, the shortfall ratio or the percentage of bad loans to Total deposits stood at Rs. 11.89 tril-
is likely to be funded by SBI. total advances declining 4 bps y-o-y to lion, an increase of 24.6% over 30 June
The non-subscribed portion of the FPO 1.36%. Its net NPA ratio was also down last year. Its current and savings ac-
would be allotted to SBI Capital Mar- 10 bps to 0.33% in Q1 FY21. However, count (CASA) deposits grew 26% with
kets, who had agreed to underwrite compared to the March quarter of savings account deposits at Rs. 3.27
Rs. 3000 crore worth of shares at a FY20, HDFC Bank’s gross bad loan ra- trillion and current account deposits at
price equal to the lower end of the tio was up 10 bps. Rs. 1.5 trillion. The bank said its CASA
price band, said a third person cited The bank said in a statement that in deposits now comprise 40.1% of total
above. line with the additional regulatory deposits as of 30 June, 2020.
"While the deal is successfully closed package guidelines dated 23 May, the HDFC Bank’s total capital adequacy
having crossed the minimum 90% sub- bank granted a second three-month ratio (CAR) as per Basel III guidelines
scription mark and does not need to moratorium on installments or inter- was at 18.9% as on 30 June, as against
utilise the underwriting, SBI wants to est, as applicable, due between 1 June a regulatory requirement of 11.075%,
signal its commitment to the bank and and 31 August. including the capital conservation
thus it will be finding the shortfall to “For all such accounts where the mora- buffer of 1.875%, and an additional
reach the Rs15,000 crore target," he torium is granted, the asset classifica- requirement of 0.20% for being a Do-
said. tion shall remain stand still during the mestic Systemically Important Bank

“We are pleased with the completion moratorium period (i.e. the number of (D-SIB).

BANKING FINANCE | JUNE | 2020 | 7