HDFC Bank Q1 Results: Net profit jumps 30% to Rs 11,952 crore, beats analysts' estimates

HDFC Bank Q1 results: HDFC Bank on Monday (July 17) reported a 30 per cent year-on-year jump in standalone profit after tax (PAT) to Rs 11,951.8 crore for the quarter ended June 30, 2023, beating analysts' estimates. This is HDFC Bank's first earnings report since the completion of its mega-merger with Housing Development Finance Corporation (HDFC).

The lender's net interest income (NII) — or the difference between interest earned and interest paid — grew 21.1 per cent to Rs 23,599 crore, according to a regulatory filing. Its net interest margin (NIM) — a key measure of profitability — remained flat sequentially at 4.1 per cent. 

According to Zee Business research, HDFC Bank's quarterly net profit was estimated at Rs 11,580 crore, NII at Rs 24,000 crore and NIM at 4.2 per cent. 

HDFC Bank shares rose by as much as Rs 29.6 or 1.8 per cent to Rs 1,674.8 apiece on BSE after the earnings announcement.

Asset quality

HDFC Bank's asset quality deteriorated marginally, measured as the percentage of non-performing assets (NPAs) or bad loans in total loans. Its gross NPAs increased to 1.17 per cent for the quarter ended June from 1.12 per cent sequentially. Its net bad loans also worsened, coming in at 0.30 per cent as against 0.27 per cent for the previous three months. 

Riding on the back of strong loan growth

The banking behemoth's strong quarterly performance was in tandem with its operational update, released on July 5, which showed its gross advances increased 15.8 per cent to Rs 16,15,500 crore and deposits grew 19.2 per cent to Rs 19,13,000 crore, as of June 30, 2023. Its current account and savings account (CASA) deposits increased 10.7 per cent and CASA ratio came down to 42.5 per cent from 45.8 per cent a year ago. 

The CASA ratio is the proportion of a lender’s deposits in current and savings accounts to its total deposits. A lower CASA ratio means a smaller portion of a bank’s total deposits are in low-cost accounts, translating to a higher cost of funds, and vice versa.

Other income

Other income (non-interest revenue) at Rs 9,230 crore was 28.1 per cent of the net revenues for the quarter under review, as against Rs 6,388 crore for the year-ago period. The four components of other income were fees and commissions of Rs 6,290 crore (Rs 25,360 crore in the corresponding quarter of the previous year), foreign exchange and derivatives revenue of Rs 1,309 crore (Rs 1,024 crore in the corresponding quarter of the previous year), net trading and mark-to-market gains of Rs 552 crore (loss of Rs 1,077 crore in the corresponding quarter of the previous year), and miscellaneous income, according to a company statement.

HDFC Bank shares finished the June quarter 5.7 per cent stronger, underperforming gains of more than 10 per cent each in the Nifty and Nifty Bank indices.

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