HDFC Bank is the latest and one of the biggest lenders after ICICI Bank to be hit by the RBI's risk-based supervision which found divergences worth Rs 2,052 crore in gross non-performing asset (NPA) classification for FY17.
As on March 2017, HDFC Bank had reported gross NPAs worth Rs 5,885 crore while RBI, in its supervision that ended in October last year, found the NPAs to be at Rs 7,937 crore.
Paresh Sukthankar, deputy managing director at HDFC bank said, "As of the last quarter we had mentioned that while there was no finality we had already made contingent provisions, immediately thereafter that account had been declared an NPL (non-performing loan). Of the balance amount, some had already been declared NPL in the June quarter and the September quarter, since we now have finality we have given the divergence of the total NPLs.
"The account was subject to flexible restructuring under RBI's 5:25 resolutions mechanism and has been upgraded. Though it has been declared as an NPA, from a servicing perspective the account had not been past 90 days, Sukthankar added.
Last quarter, a day after announcing results, HDFC Bank disclosed that RBI had found divergence pertaining to one disputed loan. There were talks the loan account was that of Jindal Steel and Power, which has a net debt of about Rs 44,000 crore. HDFC Bank, though, refrained from disclosing any further details.
After the disclosure, Bloomberg wrote about the "unhappy secret of the world's priciest lender".
More divergences and stable asset quality
For FY17, divergence in net NPAs were found to be at Rs 1,258 crore, as RBI assessment found net NPAs to be at Rs 3,102 crore while HDFC Bank had reported them at Rs 1,844 crore.
HDFC Bank, which became the first bank and the third company to touch market capitalisation of Rs 5 lakh crore on Thursday, reported a 20 percent rise in net profit to Rs 4,642 crore for the third quarter ending December 2017.
Net interest income, or the core income of the lender, rose 24 percent to Rs 10,314 crore.
The profit was also helped by strong loan growth of 27.5 percent and rise in other income of 27 percent including fees and commissions, foreign exchange and derivatives revenue and profit on sale of investments.
According to Sukthankar, "Right now, given that the large part of economy is driven by consumption demand, the retail part has seen strong underlying demand, whether it is car sales or truck sales. On the wholesale, it is driven more by some amount of working capital, some amount of mid-tenor loans and some refinancing.
Gross NPAs as a percentage of the total loan book also showed some pain at 1.29 percent, as opposed to 1.26 percent in the quarter ended September 2017 and 1.05 percent a year ago.
Net NPA ratio also edged up to 0.44 percent compared to 0.43 percent in the previous quarter and from 0.32 percent year ago ending December 2016.
Profits were also helped by lower provisions made for bad loans, falling nearly 90 percent to Rs 1,352 crore, compared to Rs 715 crore a year ago and marginally declined from to Rs 1,476 crore in the September-ended quarter.
Divergence in provisions between HDFC bank and RBI's assessment stood at Rs 793 crore.
For FY17, Axis Bank reported divergences of Rs 5,633 crore while Yes Bank reported Rs 6,355 crore worth of divergences from RBI's assessment.
For FY16, three banks had reported divergences -- ICICI Bank (divergence of Rs 5,105 crore), Axis Bank (Rs 9,478 crore) and Yes Bank (Rs 4,176.70 crore.
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