HDFC Bank on Saturday missed analysts estimates when it reported a 19.58 per cent rise in net profit for the June quarter of 2020. The country’s largest private sector lender also warned of higher defaults because of the Covid-19 crisis leading to more provisions in the period ahead.

The quarter saw the private sector bank posting a net profit of Rs 6,658.62 crore compared with Rs 5,568.16 crore a year ago because of a good growth in advances.

Brokerages such as ICICI Securities had expected the bank to post net profits in the region of Rs 7,000 crore.

Analysts have been expecting banks to report a steady performance with their bad loans remaining stable given the moratorium that will end in August.

However, HDFC Bank witnessed a slight deterioration in its asset quality with gross non performing assets (NPAs) rising to Rs 13,773.46 crore against Rs 12,649.97 crore in the preceding three months and Rs 11,768.95 crore in the year-ago period. On a sequential basis, the percentage of gross NPAs to gross advances rose 10 basis points to 1.36 per cent.

During the quarter, provisions and contingencies were higher at Rs 3,891.5 crore (consisting of specific loan loss provisions of Rs 2,739.8 crore and general and other provisions of Rs 1,151.7 crore) against Rs 2,613.7 crore in the year-ago period.

HDFC Bank said in its notes to accounts that during the quarter, it used its analytical models to determine slippages, resulting in a more expedited recognition of NPAs, as well as accelerated corresponding specific provisions. Further, it has also provisioned against the potential impact of Covid-19 based on the information available at this point in time which are in excess of the norms prescribed by the RBI.

“The impact of Covid-19, including changes in customer behaviour and pandemic fears, as well as restrictions on business and individual activities, has led to a significant decrease in global and local economic activity, which may persist even after the restrictions related to the Covid-19 outbreak are lifted,” it said.

During the quarter, the bank’s net interest income rose almost 18 per cent to Rs 15,665.4 crore from Rs 13,294.3 crore in the year-ago period.

Puri successor

Aditya Puri, managing director and CEO of HDFC Bank, who spoke to shareholders at its annual general meeting for the final time before his term comes to end on October 26, indicated that his successor will be from the bank.

“Our potential successor has been with us for 25 years, my successor was always in place at least in my mind. It is now for the RBI to decide,” he said.

While the bank has been in the news for launching a probe in the vehicle loans division, Puri said internal enquiries carried out in the matter based on whistleblower complaints has not brought out any issue of conflict of interest.