HDFC Bank, India’s most valuable private sector lender, on Saturday, reported a stable set of numbers for the March quarter. The bank’s net profit rose 17.7% to ₹6,927 crore over a year, on the back of higher other income, net interest income, and a lower tax cost.

Its net interest income improved 16.2% to ₹15,204 crore during the same period. Despite the disruption in economic activity due to the lockdown triggered by the Coronavirus outbreak, HDFC Bank’s asset quality remained stable on a quarter-on-quarter basis. The bank’s gross NPA (non-performing asset) declined to 1.26% from 1.42%, while net NPA reduced to 0.36% from 0.48% during the same period.

However, HDFC Bank said it would be granting a moratorium of three months on loan repayments to eligible borrowers to comply with the Reserve Bank of India’s (RBI) guidelines notified on March 27. “The bank holds provisions as on March 31, 2020, against the potential impact of Covid-19 based on the information available at this point in time and the same are in excess of the RBI prescribed norms. As a result, GNPA and NNPA ratios were lower by 10 bps and 6 bps, respectively,” HDFC Bank said in its earnings release.

However, HDFC Bank cautioned investors of the toll the Covid-19 pandemic could exert on the economy, and the bank, in the coming months. “With the government initiating lockdown in the latter half of March, and our strict adherence to social distancing, not only did we see an impact on business volumes--in terms of loan originations, distribution of third party products, and payments product activities--but we also could not optimise our collection efforts, and as a result of which fees/other income were lower by ₹450 crore,” HDFC Bank said.

In line with this, provisions for bad loans rose 24% on a quarter-on-quarter basis to ₹3,748 crore. This also comprises a contingency provision of ₹1,550 crore in light of anticipated delay in collections caused by the lockdown enforced by the government from March 25.

During the March quarter, the bank’s deposits grew 24.3% to ₹11,47,502 crore from the year-ago period; total advances rose 21.3% to ₹9,93,703 crore during the same period. Retail loans grew 14.6% and wholesale loans rose 29.3%, while overseas loans constituted 3% of the loan book in the March quarter.

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