Private Sector Banks Reap Good Q2 Profit, Bad Loans

Ease
Private sector lenders HDFC Bank Limited and Kotak
Mahindra Bank Limited reported second-quarter (Q2) net
profit increased on higher interest and fee income, while their
bad-loan ratios were less than the previous quarter.
HDFC Bank Limited, the nation's 2nd biggest private sector
lender, said on Tuesday that its net profit for July-September
quarter (Q2) climbed 20 per cent from a year ago to Rs 3,455
cr (or 517 million dollars), just beating analysts' estimate of
Rs 3,415 cr.
The banking sector of India has been burdened with about 138 billion dollars of stressed
loans however the bulk of the bad assets are with close to two dozen state-run banks.
HDFC's gross bad loans were 1.02 per cent of total loans outstanding as of September 30,
down from 1.04 per cent at the end of the month of June. The bank, an investor favourite
because of its strong retail banking business and relatively small exposure to project
finance, has the lowest bad-loan ratio amongst the bigger lenders.
Kotak Mahindra Bank Limited, the fourth-biggest private sector lender by assets, said that
second-quarter (Q2) net profit rose 43 per cent from a year ago to Rs 813 cr. Its gross badloan ratio narrowed to 2.49 per cent at end-September, from 2.5 per cent at end-June.
Federal Bank, a smaller private sector lender, registered a better-than-expected 25 per cent
rise in second-quarter (Q2) net profit to Rs 201 cr, sending its shares more than 4 per cent
higher. Its gross bad-loan ratio was 2.78 per cent at end-September, lower than 2.92 per
cent at end-June.
HDFC Bank share price closed trading at one per cent down after the quarterly results on
the other hand, Kotak Bank share price closed at Rs.786.55. The main Mumbai market
index was down 0.26 per cent as of 0801 GMT. The third-biggest private sector lender
Axis Bank reports second-quarter (Q2) results later in the day. On a broader note, the so
far, private banking sector has reaped Q2 profit boost with an ease in bad loans.

HDFC Bank and Kotak Mahindra Bank are both analyzed by Dynamic Levels Researchers
and analysts as the top 500 performing stocks for the current quarter among the 1700
stocks which are listed on the National Stock Exchange (NSE). HDFC Bank and Kotak
Mahindra Bank are both fundamentally strong and safe for investment, as per Dynamic
Levels analysts and market experts. HDFC Bank and Kotak Bank have market caps of Rs.
321653.55 (Cr) and Rs. 144660.36 (Cr).

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Article Written by
Salman Hashmi