Banking Sector

The standalone net profit of the bank, in the April-June quarter, stood at Rs 1,181 crore up from Rs 332.7 crore in corresponding period last fiscal. The higher profit has been achieved with a growth in other non-interest income and despite increased coverage provided for non-performing assets (NPAs). The Credit cost reduced by 135 bps QoQ for Q1FY22.

Accordingly, the bank's net profit rose to Rs 603 crore as against Rs 144 crore for Q1FY21. "Net Profit for Q1-2022 has improved by 18 per cent against Rs 512 crore reported for Q4-2021," the bank said in a statement. Besides, net interest income (Net Interest Income) improved by 41 per cent for Q1FY22 to Rs 2,506 crore as against Rs 1,772 crore for Q1FY21.

Its net profit during the quarter under review rose to Rs 1,016 crore from Rs 510 crore in the corresponding period of last fiscal. Net interest income for the quarter under review rose to Rs 3,564 crore, up by 8 per cent from Rs 3,309 crore for the quarter ended June 30, 2020. As per the lender, net interest margin for Q1FY22 stood at 4.06 per cent from 4.28 per cent for Q1FY21.

The bank said in a statement that its net interest income rose just 0.84 per cent year-on-year (YoY) in Q1FY22 to Rs 6,147 crore versus Rs 6,096 crore. The net interest margin fell to 2.71 per cent for Q1 against 2.84 per cent in the year-ago period. But it made more of this fall from big 67.47 per cent jump in non-interest earnings in the April-June quarter.

On a standalone basis, the profit after tax grew to Rs 4,616 crore compared to Rs 2,599 crore in Q1FY21. Similarly, the bank's net interest income (NII) during the quarter rose by 18 per cent year-on-year to Rs 10,936 crore, from Rs 9,280 crore earned during the corresponding quarter of the previous year. The bank made provisions of Rs 2,852 crore in Q1FY22 .

The ECB Governing Council "expects the key ECB interest rates to remain at their present or lower levels until it sees inflation reaching two percent well ahead of the end of its projection horizon and durably for the rest of the projection horizon", the central bank said in a statement released on Thursday. "This may also imply a transitory period in which inflation is moderately above target," it added.

The consolidated net profit for Q1FY22 rose to Rs 311 crore from Rs 193 crore in Q1FY21, on account of growth in revenue and improvement in margins. According to the company, the rise was aided by strong all-round performance in equities and allied business, distribution business, distribution business, private wealth management business, as well as investment banking business.

The RBI Bulletin for July 2021 noted that the central bank has made several attempts to improve the effectiveness of monetary transmission by refining the process of interest rates setting by banks. In response to the cumulative reduction of policy repo rate by 250 basis points, the one year median marginal cost of funds-based lending rate of SCBs declined 155 bps during February 2019 to June 2021.

Besides, the bank's net interest income rose to Rs 17,009.0 crore from Rs 15,665.4 crore for the quarter ended June 30, 2020. "During the quarter, the country was hit by a 'second wave' of Covid-19, with a significant surge in cases following the discovery of mutant coronavirus strains. While there was an improvement towards the end, business activities remained curtailed for almost two thirds of the quarter."

Accordingly, HDFC Securities, expects banks to remain selective in restructuring stressed assets. "We believe that NBFCs (lender category) and the MSME sector (borrower category) are likely to witness the highest amount of restructuring," the brokerage firm said in a report. Besides, the firm expects a stop-start pattern in loan disbursements during Q1FY22, particularly in retail.