HDFC Bank ADR Plunges Over 9% After Q3 Results Disappoint Investors
The American Depository Receipts of the bank fell as much as 8.63% to $55.9—the most since April 18, 2022.
The U.S.-listed shares of HDFC Bank Ltd. extended losses by plunging another 9% on Wednesday after the private lender announced its third quarter results.
The American Depository Receipts of the bank fell as much as 9.38% to $55.44—the most since April 03, 2020.
The shares plunged nearly 7% on Tuesday.
Shares of HDFC Bank declined by nearly 9% on Indian bourses on Thursday, dragging the benchmark indices and slashing Rs 92,984 crore from investor wealth—the most since March 23, 2020.
Net profit for the Mumbai-based lender stood at Rs 16,373 crore in the October–December quarter, as compared with Rs 15,976 crore in the previous quarter. It missed analysts' estimates.
The core net interest margin for the bank stood at 3.4% as of Dec. 31, and at 3.6% on an interest-earning assets basis. The numbers remained flat sequentially.
HDFC Bank Q3 Highlights (QoQ)
Net profit: Rs 16,373 crore vs Rs 15,976 crore.
Net interest income: Rs 28,471 crore vs Rs 27,385 crore.
Gross NPA: 1.26% vs 1.34%.
Net NPA: 0.31% vs 0.35%.
Capital adequacy ratio: 18.39% vs 19.54%.
Key Reasons Why Q3 Earnings Were A Miss
The net interest income of India's largest private lender did not rise as fast as the markets had expected. It grew about 4% on a quarter-on-quarter basis, as against the expected 8%.
The bank failed to post strong deposit growth.
Third, the rise in HDFC Bank's bottom line was weighed down by a significant rise in provisions during the quarter. Provisions increased to Rs 4,216.6 crore in the reporting quarter, up 50% quarter-on-quarter.
On the deposit front, the bank added about Rs 41,000 crore—lower than the guided trajectory—which is also concerning due to the slowing down of its branch network expansion.
