India’s largest private sector lender HDFC Bank has warned of higher defaults due to the Covid-19 crisis.
The company made this forecast while announcing its results for the quarter ended on June 2020.
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In the last three-month period, HDFC Bank registered net profit of INR66.58bn ($889.11m). The figure is nearly a 20% increase over INR55.68bn reported in the same quarter a year ago.
The bank attributed the increase to higher interest income and lower costs, reported Reuters.
In the same April-June quarter, the bank’s net interest income jumped by 18%. Its operating costs also dropped by 3%.
The proportion of gross non-performing assets to all loans stood at 1.36%, slightly higher than 1.26% reported in the quarter ended in March 2020.
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By GlobalDataProvisions and contingencies rose to INR 38.92bn, from INR22.48bn reported a year ago. The provision, an amount set aside to account for potential defaults, is expected to increase as the bank anticipates higher number of bad loans.
HDFC Bank also acknowledged a drop in the number of new retail loan originations as economic activity plummeted due to Covid-19 related lockdowns.
It also noted a fall in sale of third party products, credit and debit card use and efficiency in collection efforts.
Recently, the People’s Bank of China (PBoC) divested its stake in HDFC Bank. The move was reported citing the lender’s latest shareholding data.
