India's largest private lender HDFC BANK has reported a 19.6 percent year-on-year growth in standalone profit for the quarter ended June 2020, led by lower tax cost and NII. However, elevated provisions, and lower other income due to slowdown in economic activity limited profit growth.

Profit during the quarter increased sharply to Rs 6,658.62 crore, compared to Rs 5,568.16 crore in the same period last year.

Net interest income in Q1 FY21 climbed 17.8 percent year-on-year to Rs 15,665.42 crore supported by healthy loan growth of 21 percent in the quarter and deposits growth of 24.6 percent, said the bank in its BSE filing.

Net interest margin for the quarter stood at 4.3 percent.

The bank said CASA deposits grew by 26 percent and time deposits increased by 23.7 percent YoY, resulting in CASA deposits comprising 40.1 percent of total deposits as of June 2020. "The bank's continued focus on deposits helped in the maintenance of a healthy liquidity coverage ratio at 140 percent, well above the regulatory requirement."

Provisions and contingencies for the quarter stood at Rs 3,891.52 crore, increasing 48.9 percent compared to the corresponding period last fiscal and 2.8 percent on a sequential basis.

Asset quality weakened on expected lines during the quarter as gross non-performing assets (NPA) climbed sequentially to 1.36 percent (from 1.26 percent), and excluding agricultural segment, gross NPAs increased to 1.2 percent from 1.1 percent QoQ. However, net NPAs dropped to 0.33 percent during the June quarter, from 0.36 percent during the March quarter.

Pro-provision operating profit (PPoP) jumped 15.1 percent to Rs 12,829.27 crore compared to the year-ago quarter as operating expenses declined down 2.9 percent YoY primarily due to lower loan origination and sales volumes.

"Earnings and PPoP were 15 percent and 5 percent over our estimates. Higher-than-expected operational profit arose as operating expenses were contained which reflects high modularity of the business (a positive surprise).