>HDFC BANK (GEPL)

COMPANY PROFILE

HDFC Bank promoted by HDFC Ltd is amongst the first private sector banks that were permitted by the RBI, during the 'Reform Era' of early 1990's, to undertake banking
activities. The bank commenced operations in 1995. Currently it operates 1412 branches and
3295 ATMs in 528 cities and has an asset size of Rs 1833 bn at the end of March 31, 08 with
retail assets constituting 61% of the gross advances. HDFC bank completed the acquisition of Centurion Bank of Punjab (CBoP) in May 2008 by offering one share of its own for every 29 shares of CBoP. At the time of merger CBoP had a balance sheet size of Rs 254 bn, representing 20% of HDFC Bank.

Key Highlights of HDFC Bank Q4FY09 Conference Call:

· HDFC Bank Ltd's net profit for FY09 grew by 41.2% y-o-y to Rs 22.4bn mainly driven by the merger of Centurion Bank of Punjab which was effective from May 23, 2008, and a robust 42% y-o-y and 44% y-o-y growth in net interest income and non interest income to Rs 74.2bn and Rs 32.9bn respectively.

· In Q4FY09 the bank registered a 33.9% increase in its net profits to Rs 6.3 bn mainly due to higher non interest income which grew by 102% y-o-y to Rs 11.1bn due to robust growth in its fee based income and profit on sale of investments during the quarter.

· Operating profit grew by 37.5% y-o-y to Rs 51.8bn in FY 09 and by 44.3% y-o-y to Rs 15.7bn in Q4FY09.

· Net interest income expanded by 42% in FY 09 to Rs 74.2 bn mainly on account of a robust growth in advances by 48.3% to Rs 1002.3bn. Retail loans at Rs 611.5 bn were up by 55.5% over March 08 and now form 61% of gross advances. Net interest income in Q4FY09 declined by 6.4% q-oq to Rs 18.5bn despite a decrease in the cost of funds to 5.9% in Q4FY09
from 6.5% in Q3FY09. This was mainly on account of the cautious lending approach adopted by the bank in this scenario. The NIMs for FY 09 stood at 4.2% and going forward the management expects to maintain it at around 4%.

· Total deposits increased by 41.7% y-o-y to Rs 1428 bn at the end of March 08. The CASA deposits of the bank saw a revival in Q4FY09 and total CASA as % of total deposits stood at 44% at the end of March 09 as against 40% at the end of Dec 08.

· Non Interest Income registered a 102.9% y-o-y gain in Q4FY09 to Rs 11.1 bn due to a 45.8% increase in fee based income to Rs 7.1 bn, 153% growth in forex/derivative income to Rs 1.5bn and 2037% growth in profit on sale of investments to Rs 2.4 bn. Non interest income in FY 09 increased by 44.1% y-o-y to Rs 32.9bn.

· With the worsening economic environment starting to hurt the bank's SME and retail assets and slightly lower asset quality of CBoP, HDFC Bank has reported a 64 bps y-o-y and 8 bps q-o-q increase in gross NPA levels to 1.98% and 10 bps y-o-y increase in net NPA levels to 0.6%. With the bank's provisioning policies for Q4FY09 for specific loan loss provisions remaining higher than regulatory requirements its provision coverage stood at 68%.

To see full report: HDFC BANK