HDFC Bank’s Q4FY21 NII grew 14% YoY and 7% QoQ to Rs. 18,524 cr, but its asset quality disappointed as net NPAs rose to 0.40% from 0.09% QoQ (reported) and 0.36% YoY. As SC relief on NPA classification was relaxed on 23.3.21, proforma NPA of 31.12.20 became reported NPA as of 31.3.21. This trend will be visible across Q4 results for most lenders.

Analysing proforma net NPAs as of 31.12.21 for other large banks and NBFCs shows that maximum stress may be visible for IDFC First, Bandhan and RBL Bank, while HDFC Bank may still have the healthiest book, followed by Indusind.

And this is for pain already in the system. As the second wave intensifies, all eyes will now be on Q1FY22. Although businesses are so far confident of second wave to have lower financial impact vis-a-vis the first wave due to localised lockdowns being partial (restricted to weekends/night), its too early to assess the full quarter impact.

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