HDFC Bank Q2 Results: Net Profit Rises 50% On Higher Core Income
The bank's net interest income rose 30.2% to Rs 27,385 crore from a year ago.
HDFC Bank Ltd. reported a rise in net profit for the second quarter of fiscal 2024.
The lender's net profit rose 50.6% year-on-year to Rs 15,976 crore, as compared with Rs 10,605 crore a year ago. It surpassed the Bloomberg estimate of Rs 14,120 crore.
This is the first quarterly earnings by the lender after the $40-billion mega merger with HDFC Ltd. came into effect on July 1. Therefore, the figures are not strictly comparable.
Net interest income, or core income, for the bank rose 30.2% from last year to Rs 27,385 crore in the quarter. Other income increased 41% year-on-year to Rs 10,707 crore.
The lender's net interest margin stood at 3.4% as of Sept. 30, as compared with 4.1% as of June 30. According to Srinivasan Vaidyanathan, chief financial officer of HDFC Bank, the dip was largely due to the debt financing of liquidity by HDFC Ltd. before the merger.
"Over time, some of this debt funding will be repaid and the liquidity will get replaced by retail deposits. NIM will progressively go up as these changes happen," Vaidyanathan said.
Asset quality for the lender worsened with gross non-performing asset ratio rising 17 basis points sequentially to 1.34%, as of Sept. 30. Net NPA ratio also rose by 5 bps quarter-on-quarter to 0.35%.
Of the 1.34% gross NPA number, approximately 22 basis points worth loans are actually standard and performing, but classified as NPA due to technical reasons such as restructuring, Vaidyanathan said.
Provisions for the quarter fell 10.3% to Rs 2,903 crore from a year ago.
Total deposits of the bank grew by 29.8% year-on-year to Rs 21.7 lakh crore in the September quarter. Current account savings account deposits rose 7.6%, with CASA ratio falling to 37.6%, from 42.5% as of June 30.
"We have grown by about Rs 3.5 lakh crore in FY23. This fiscal, on a quarter-on-quarter basis, we are growing about 5.3%, which indicates that on a full-year basis the deposit book should grow by 20%," Vaidyanathan said.
Gross advances increased 57.7% year-on-year to Rs 23.5 lakh crore in Q2. Domestic retail loans rose 112% year-on-year, while the wholesale book rose 8% from last year. The commercial and rural loan book rose by 30%.
"We have historically grown at about 400 basis points premium to system credit growth rate. Our aspiration is to continue growing at a premium to the system," Vaidyanathan said.
