HDFC Bank announced its earnings for Q3FY21 on Friday and they beat all estimates.

It posted a net profit of Rs.8758 crore, up 18% (YoY) while NII rose 15% at Rs.16,318 crore.

Business during the quarter was robust as it reported a 16% increase in advances and 19% in deposits.

Provisions and contingencies for the quarter ended December 2020 were Rs 3,414.1 crore (consisting of specific loan loss provisions of Rs 691.2 crore and general and other provisions of Rs 2,722.9 crore) as against Rs 3,043.6 crore (consisting of specific loan loss provisions of Rs 2,883.6 crore and general and other provisions of Rs 159.9 crore) in Q3FY20. Total provisions for the current quarter included contingent provisions of approximately Rs 2,400 crore for proforma NPA.

Its asset quality improved with Gross NPA declining 27 bps to 0.81% (QoQ) and Net NPA fell to 0.09% v/s 0.17%.

The Supreme Court directed banks that accounts that were not declared NPA till August 2020 shall not be declared NPA until further orders and HDFC Bank said, “if the Bank had classified borrower accounts as NPA after August 2020 using its analytical models (proforma approach), the proforma gross NPA ratio would have been 1.38% as on December 2020 v/s 1.37% in Q2 and 1.42% in Q3FY20. The proforma net NPA ratio would have been 0.40%."

The stock price reacted very positively to this news, going on to hit  a new high at Rs.1503 and it is now trading at Rs.1495 levels.